Elon Musk offers $94.4 billion for OpenAI assets

Elon Musk and a group of investors have made an unsolicited $94.4 billion takeover bid for the non-profit organisation that controls OpenAI, according to two people familiar with the matter. This was reported by two people familiar with the matter. The offer fuels the years-long conflict between Musk and OpenAI CEO Sam Altman.

The investors include VY Capital, Baron Capital Group, Valor Management, Atreides Management, 8VC, and Musk’s own AI company xAI. Hollywood mogul Ari Emanuel is also involved. The Wall Street Journal was the first to report the offer.

‘Elon Musk’s boldest attack’

The New York Times describes the offer as one of Musk’s ‘boldest attacks’ on an organisation he helped found almost ten years ago. But the chances of success are slim, as OpenAI’s board is closely aligned with Altman.

Altman responded to X (formerly Twitter) with an ironic refusal: ‘No thanks, but we’ll buy Twitter for $9.74 billion if you want…’ Musk countered with ‘imposter’.

Musk, through his lawyer, told the Wall Street Journal: ‘It is time for OpenAI to once again become the open-source, security-focused force it once was. We will make sure that happens.’

Impact on OpenAI’s fundraising plans

According to the New York Times, OpenAI has not yet officially received the offer. Nevertheless, it could complicate the company’s ongoing attempt to raise $40 billion in new investment.

This fundraising round is led by SoftBank and values OpenAI at $300 billion – making it one of the most valuable private companies in the world, alongside Musk’s SpaceX and ByteDance (the maker of TikTok). However, Musk’s offer could slow down this process.

Lawsuit with the New York Times

In addition, OpenAI is under pressure due to a lawsuit filed by the New York Times. The newspaper accuses OpenAI and Microsoft of copyright infringement in connection with the use of news content for AI models. Both companies reject the allegations.

The founding and development of OpenAI

OpenAI was founded as a non-profit organisation by Musk, Altman and other entrepreneurs and researchers at the end of 2015 with the aim of freely sharing their technologies with the world. Three years later, Musk left the company after internal disputes over control.

Altman then converted OpenAI into a for-profit organisation to secure the necessary financial resources to further develop AI technology. Despite this restructuring, control remained in the hands of a non-profit board.

In 2023, a dramatic turning point occurred: the board unexpectedly dismissed Altman on the grounds that he was no longer trustworthy in his handling of AI for the benefit of humanity. However, just five days later, Altman returned and has since been working to reduce the influence of the non-profit board.

Complex corporate structure as a weak point

OpenAI’s structure is unusual: while the non-profit organisation has only two employees and $22 million in assets, it still has legal control over the multibillion-dollar company.

To break away from this board, OpenAI would have to pay financial compensation – either as a one-time sum or by taking a minority stake in the company.

Musk’s offer could redefine the value of this non-profit organisation and force OpenAI to raise more money to break away. Meanwhile, regulators in Delaware (where OpenAI is registered) and California (where it is based) are examining the legal implications of this proposal.

Binci Heeb

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