Elon Musk’s consortium will withdraw its $97.4 billion bid for OpenAI if the company maintains its nonprofit status. OpenAI is considering restructuring into a for-profit firm to secure more capital and stay ahead in the AI race. Musk, who owns rival startup xAI, opposes this move and wants OpenAI to “maintain its mission as a charitable organization.”
Legal Dispute Over OpenAI’s Future
Musk is actively trying to block OpenAI’s transition to a for-profit model. His lawyers stated in a lawsuit that if OpenAI’s board commits to preserving its nonprofit mission and ceases asset conversions, Musk will drop the bid. Otherwise, “the charitable organization should be compensated in the amount of what an independent buyer would pay for its assets.”
Musk co-founded OpenAI with Sam Altman in 2015 but left in 2018 due to disagreements over its direction and funding. Altman, now OpenAI’s CEO, later introduced a for-profit arm to attract investors like Microsoft. He is currently working on a restructuring plan that would make the core business fully for-profit while the nonprofit retains a stake in the company. Musk’s lawsuit aims to prevent this transition.
Market Impact and Future Developments
OpenAI has not yet received a formal offer from Musk’s group, according to Reuters. However, Altman has dismissed the bid, calling it “ridiculous,” and reaffirming that the nonprofit controlling OpenAI is not for sale.
Analysts believe that Musk’s involvement could complicate OpenAI’s commercial expansion, as it might set a high minimum valuation for the nonprofit overseeing the company, notes NIXSolutions. Meanwhile, SoftBank Group is reportedly in talks to lead a funding round of up to $40 billion, valuing OpenAI at around $300 billion.
The situation is evolving, and we’ll keep you updated on further developments.