Altman Rejects Elon Musk’s $97.4 Billion OpenAI Takeover Bid \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ OpenAI CEO Sam Altman has rejected a $97.4 billion takeover bid led by Elon Musk, calling it a distraction from the company’s mission to develop AI for the benefit of humanity. Musk’s offer intensifies an ongoing power struggle between the two former co-founders, with OpenAI’s nonprofit board now facing legal and ethical questions about its future. Meanwhile, Altman has accused Musk of attempting to slow down OpenAI as a competitor.
Sam Altman Rejects Musk’s OpenAI Takeover: Quick Looks
- Altman dismissed Musk’s $97.4 billion bid, reaffirming that OpenAI is “not for sale.”
- Musk’s offer complicates OpenAI’s transition from nonprofit to for-profit status.
- OpenAI’s board, not just Altman, will decide on any potential sale.
- Board chair Bret Taylor also rejected Musk’s offer, calling it a “distraction.”
- Legal challenges loom, with Musk suing OpenAI over its mission shift.
- OpenAI’s nonprofit status raises concerns about whether it can legally sell assets.
- Musk’s Twitter takeover followed a similar pattern, starting with an unsolicited bid.
- Altman accused Musk of acting out of insecurity, saying he wants to “slow OpenAI down.”
Deep Look
Musk’s $97.4 Billion Offer and OpenAI’s Response
In a dramatic escalation of their long-running feud, OpenAI CEO Sam Altman has publicly rejected an unsolicited $97.4 billion takeover bid led by Elon Musk and a coalition of investors. Speaking at an artificial intelligence summit in Paris on Tuesday, Altman made it clear that OpenAI is not for sale, reinforcing his vision for the company’s independence.
“We are not for sale,” Altman stated, emphasizing OpenAI’s commitment to ensuring artificial general intelligence (AGI) benefits all of humanity.
The bid, announced by Musk on Monday, comes amid a years-long power struggle between the two former OpenAI co-founders. Musk was an early investor and board member of OpenAI but left in 2018 after a leadership dispute with Altman. Since then, their rivalry has deepened, with Musk founding his own AI startup, xAI, to compete directly with OpenAI.
The Battle Over OpenAI’s Nonprofit Status
The biggest complication surrounding Musk’s bid is OpenAI’s unique corporate structure. Originally founded in 2015 as a nonprofit research lab, OpenAI later created a for-profit subsidiary to attract investors. However, the nonprofit board still retains control over OpenAI’s mission and governance.
While Altman himself cannot unilaterally reject the offer, OpenAI’s board holds the final decision. Board chair Bret Taylor echoed Altman’s stance at a Wall Street Journal event, dismissing Musk’s offer as “largely a distraction.”
“Our job is very simple,” Taylor said. “We must evaluate every strategic decision through one test: ‘Does this further the mission of ensuring AGI benefits humanity?’ I have a hard time seeing how this would.”
Legal experts suggest that OpenAI’s charitable mission could legally prevent a takeover. Jill Horwitz, a UCLA Law professor, stated that OpenAI made a legally binding promise to the public when it was founded, meaning it cannot simply transition into a traditional for-profit corporation without facing legal challenges.
“It is the promise that was made to the public when OpenAI was formed,” Horwitz said. “That promise is legally enforceable.”
Musk’s History of Takeover Bids: Twitter 2.0?
Musk’s bid for OpenAI mirrors his 2022 takeover of Twitter, which also began as an unsolicited offer followed by a legal battle. Twitter’s board, which was also led by Bret Taylor, initially resisted but eventually accepted Musk’s $44 billion offer.
However, OpenAI’s situation is far more complex due to its nonprofit origins. Unlike Twitter, OpenAI is not a publicly traded company, and its board must prioritize its mission over shareholder profits.
Legal and Financial Considerations for OpenAI’s Board
Experts say that OpenAI’s board must evaluate more than just the monetary value of Musk’s offer. They will need to weigh:
- The credibility of Musk’s offer: Is it a serious bid, and will investors provide cash up front?
- The impact of new leadership: Would Musk’s leadership align with OpenAI’s nonprofit mission?
- The legal ramifications: Can OpenAI legally transition to a fully for-profit model while honoring its original commitments?
Rose Chan Loui, executive director at the Lowell Milken Center on Philanthropy and Nonprofits, pointed out that the board should assess whether Musk and his investors could truly maintain OpenAI’s mission.
“They need to consider if a new board under Musk would be independent and what guarantees they can give about protecting OpenAI’s public mission,” Loui said.
Musk’s Lawsuit Against OpenAI and the Growing Feud
Musk has not only attempted a takeover but also taken legal action against OpenAI. Last year, he sued OpenAI in California, arguing that it had abandoned its nonprofit mission in pursuit of profits. Musk claims that Altman’s leadership has steered OpenAI away from its founding principles and into the hands of big investors like Microsoft.
Musk’s legal case faces significant hurdles. A judge recently expressed skepticism about his claim that OpenAI’s transition to a for-profit entity would cause him “irreparable harm.” However, she also indicated that Musk’s case was strong enough to go to trial.
Who Else Is Backing Musk’s OpenAI Bid?
Musk’s bid is supported by a group of investors, including:
- xAI (Musk’s AI company)
- Baron Capital Group
- Valor Management
- Atreides Management
- Vy Fund
- Firms led by Musk allies Ari Emanuel and Jon Lonsdale
Musk’s lawyer, Marc Toberoff, argued that if OpenAI truly wants to become a for-profit company, its nonprofit parent organization must be compensated fairly.
“If OpenAI’s leadership is intent on becoming a fully for-profit corporation, it is vital that the charity be fairly compensated for what it is losing: control over the most transformative technology of our time,” Toberoff said.
Altman’s Take: Musk is Just Trying to Slow Us Down
Altman has characterized Musk’s moves as a competitive strategy to hinder OpenAI’s progress. Speaking to Bloomberg TV, Altman suggested that Musk’s legal challenges and takeover bid were simply tactics to slow OpenAI down.
“I think he’s probably just trying to slow us down. He obviously is a competitor,” Altman said.
Taking a personal swipe at Musk, Altman added that he believes Musk’s actions stem from insecurity.
“Probably his whole life is from a position of insecurity. I feel for the guy,” Altman said.
What’s Next?
- OpenAI’s nonprofit board must formally respond to Musk’s offer.
- A potential legal battle could follow over OpenAI’s transition to a for-profit structure.
- Musk’s lawsuit against OpenAI remains unresolved and could move to trial.
- OpenAI continues its rapid AI advancements, with its nonprofit structure still in question.
With AI’s future at stake, the battle between Altman and Musk is far from over.
You must Register or Login to post a comment.