Could Elon Musk’s Failed Bid Still Impact OpenAI?
Reuters has reported that OpenAI’s board of directors has officially declined Elon Musk’s substantial $10 billion offer for the company, which produces ChatGPT, currently regarded as the world’s most renowned artificial intelligence tool. Despite this rejection, experts suggest that Musk’s unsolicited bid may not have been entirely unsuccessful.
The situation becomes complicated due to CEO Sam Altman’s intention to transition OpenAI from a non-profit entity into a for-profit business structure. According to University of Cambridge associate teaching professor Johnnie Penn, as quoted by the BBC, “Musk is basically trying to stymie OpenAI’s growth trajectory.”
Just last week, Musk and a group of investors, including Hollywood superagent Ari Emanuel, presented an offer valued at $97.4 billion for all of OpenAI’s assets. This was indeed a substantial sum; however, it fell short compared to the $157 billion valuation achieved during a funding round just four months ago and significantly lower than some estimates that place its worth closer to $300 billion.
The complexity of the situation arises from OpenAI’s unique structure, which comprises both non-profit and for-profit arms. Altman has reportedly aimed to alter this arrangement by removing the non-profit board; however, Musk’s bid appears designed to increase these costs. As noted by Cornell University senior lecturer Lutz Finger, “By putting a price on the non-profit part of OpenAI, Musk makes it more expensive for Altman to get out of his obligations to that side.”
Musk has justified his actions as an effort to return OpenAI to its original mission—to develop AI for humanity’s benefit. However, some believe he may have ulterior motives related to his own AI company xAI and chatbot Grok, which have not received positive public reception.
“Musk has missed the AI train somewhat,” says Finger, adding that Musk is trying to undermine OpenAI as a competitive threat. Tensions between Altman and Musk reached new heights when Altman mocked the offer on Twitter (X), prompting Musk to call Altman a “swindler.” In an interview with Bloomberg, Altman shot back by suggesting that Musk’s decisions are driven by insecurity.
The dispute has also been playing out in court, where US District Judge Yvonne Gonzalez Rogers is considering Musk’s request for an injunction that would block OpenAI from its planned transition. Musk claims he will be irreparably harmed without the judge’s intervention. “It is plausible that what Mr Musk is saying is true,” Gonzalez Rogers stated during a hearing in Oakland, California.
OpenAI’s lawyers argue that Musk’s recent bid contradicts his earlier statements asserting that OpenAI assets cannot be transferred for private gain. They point out that such constraints do not apply when he and his allies are the buyers.
Some observers suggest that making a deal was never actually the goal. “I think he’s just trying to create noise, news, and consternation,” says Karl Freund from Cambrian-AI.
However, this strategy could potentially harm Musk’s reputation in addition to complicating things for his old rival. “He’s brilliant,” Freund adds, but warns that his personal agenda is leading some people to question his motives.
