Elon Musk’s group of investors has made an offer to pay $97.4 billion (about Rs. 8,46,576 crore) to acquire the charity that runs OpenAI, intensifying the conflict between the Tesla CEO and the AI startup he co-founded.
Musk stated in a statement that he aims to become OpenAI “the open-source, safety-focused force for good it once was” again with the unsolicited proposal. On Musk’s X social media network, OpenAI CEO Sam Altman replied, “No thank you, but if you want, we can buy Twitter for $9.74 billion (about Rs. 8,46,576 crore).” (Musk paid $44 billion (about Rs. 3,82,437 crore) to acquire Twitter, although external assessments indicate that its worth subsequently declined.)
The offer was initially reported by the Wall Street Journal. OpenAI chose not to respond.
According to the Journal, Musk’s own AI business, xAI, is supporting the offer and may eventually combine with OpenAI. Other sponsors of the idea include Valor Equity Partners, Baron Capital, Atreides Management, Vy Capital, Joe Lonsdale’s 8VC, and Ari Emanuel, through his investment vehicle, according to a statement from Marc Toberoff, the investor’s attorney. Lonsdale choose not to respond. Requests for feedback from the other mentioned investors were not immediately answered.
According to Rob Rosenberg, CEO of Telluride Legal Strategies, it’s hard to tell how serious Musk’s proposal is and what drove him to make it. Even if it doesn’t work, Musk’s action might make it more difficult for OpenAI to make the shift from a nonprofit to a multibillion-dollar for-profit AI behemoth, something Musk has opposed.
Rosenberg stated, “I believe he’s attempting to make a statement and raise awareness of the fact that OpenAI is still on this path to transition from a non-profit to a for-profit company.”
Toberoff stated in the statement that one of the reasons for the proposal was to exert external pressure on OpenAI as it establishes a valuation for some aspects of its operations and makes the shift to a for-profit company.
He added, “Insiders negotiating on both sides of the same table cannot determine that value.” “After all, the public benefits from OpenAI Inc., and a romantic arrangement between insiders is not in the public interest.”
Since OpenAI’s inception, Musk and Altman have been embroiled in a protracted dispute about the company’s course. Musk has said that the firm, which prioritizes transparency and safety, has given up any illusion of operating as a charity to help people. That description has been denied by OpenAI, which claimed last year that Musk was retaliating for a previous unsuccessful attempt to integrate the business with his automaker Tesla.
In the ten years since Musk and Altman co-founded OpenAI as a nonprofit, the company has raised billions of dollars in outside funding from companies like Microsoft. Musk described OpenAI’s collaboration with Microsoft as a “monopoly” that is “actively trying to eliminate competitors, such as xAI, by extracting promises from investors not to fund them” in an amended lawsuit that he first filed in August. The first complaint was 83 pages long and contained 15 claims; the updated suit is 107 pages long and contains 26 legal claims.
The US Federal Trade Commission is concerned that Microsoft may expand its dominance in cloud computing into the rapidly expanding AI sector as a result of its $13 billion (about Rs. 1,13,005 crore) investment in OpenAI. However, negotiations are underway for the Japanese investment firm SoftBank Group Corp. to invest up to $25 billion (about Rs. 2,17,317 crore) in OpenAI. This move might overshadow all previous investments and establish the company as its largest sponsor. According to Bloomberg, OpenAI is presently negotiating with investors to secure a $300 billion valuation, or around Rs. 26,05,460 crore.
Microsoft changed its multiyear agreement with OpenAI this month, permitting the firm to use cloud computing services from competitors as long as the software behemoth doesn’t want the company itself. The reorganized agreement came at the same time as OpenAI, SoftBank, and Oracle Corp. announced Stargate, a new $500 billion (about Rs. 43,42,565 crore) joint venture to construct cloud computing data centers in the US.
