Elon Musk Bids $97 Billion for OpenAI in Latest Salvo

Elon Musk, via a consortium including his AI firm xAI and other investors, has made a $97.4 billion offer to acquire the nonprofit entity controlling OpenAI, Reuters reports. This move further intensifies the billionaire's ongoing battle with OpenAI CEO Sam Altman over the future of the company.

Musk's $97.4 billion offer is a significant escalation of his conflict with Altman, which has been simmering for months. The consortium behind the bid includes Musk's AI company, xAI, as well as Baron Capital Group, Emanuel Capital, and other investors. The Wall Street Journal, which first reported the news, suggested that a successful acquisition could lead to a merger between xAI and OpenAI.

The move comes as OpenAI seeks to transition from a non-profit to a for-profit entity, a shift it argues is necessary to secure the funding required for developing cutting-edge AI models. Musk, who co-founded OpenAI with Altman in 2015 but left before the company’s success, has been critical of this transition, arguing that it prioritizes profit over the public good.

The $97.4 billion bid is a counteroffer to a potential $40 billion funding round OpenAI is currently negotiating with SoftBank Group, a deal that could value the company at $300 billion.

"This (bid) is definitely throwing a wrench in things," said Jonathan Macey, a Yale Law School professor specializing in corporate governance, to Reuters. "The nonprofit is supposed to take money to do whatever good deeds, and if OpenAI prefers to sell it to somebody else for less money, it's a concern for protecting the interests of the beneficiaries of the not-for-profit."

The consortium led by Musk faces a significant hurdle in financing such a large acquisition. While Musk's Tesla stock is valued at roughly $165 billion, his ability to leverage bank loans may be limited following his $44 billion acquisition of Twitter in 2022.

"Musk's offer to buy OpenAI’s nonprofit should significantly complicate OpenAI’s current fundraising and the process of converting into a for-profit corporation," said Gil Luria, analyst at D.A. Davidson, to Reuters. "The offer seems to be backed by more credible investors...OpenAI may not be able to ignore it. It will be the fiduciary responsibility of OpenAI’s board to decide whether this is a better offer, which could call into question the offer from SoftBank."

Despite the significant financial implications, both Musk and Microsoft, a major OpenAI backer, have yet to respond to requests for comment. Altman, however, took to social media platform X (formerly Twitter) to swiftly reject the offer, but countered with a humorous proposal of his own. "No thank you, but we will buy Twitter for $9.74 billion if you want," he posted.