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Elon Musk’s OpenAI bid of US$97.4 billion to buy the company’s nonprofit arm sparks controversy. The offer was led by xAI, Musk’s AI startup, with Baron Capital Group and Emanuel Capital. The aim is to bring back OpenAI to its original mission of being a nonprofit.
Musk, one of the co-founders of OpenAI, has been a vocal critic of the company's decision to go for profit.
On February 10, he said in a statement, "It's time for OpenAI to return to the open-source, safety-focused force for good, it once was. We will make sure that happens.”
In a short clip uploaded by Musk on his X account (formerly known as Twitter) on 11 Feb 2025, he describes that he gave the name OpenAI and the reasons behind choosing it:
OpenAI CEO Sam Altman outright rejected the proposal. He responded on Musk-owned X (formerly Twitter) with a sarcastic counteroffer, “No thank you but we will buy Twitter for US$9.74 billion if you want."
To this, Elon Musk sarcastically replied:
Musk has been at odds with OpenAI for years. He co-founded the company as a nonprofit in 2015 but left it in 2018. He has since claimed that OpenAI is more concerned with making profits than with safety.
In 2024, Musk filed multiple lawsuits against OpenAI, alleging it had abandoned its original mission. In August, he sought a court order to block OpenAI’s transition to a for-profit entity. His criticism intensified when OpenAI joined a US$500 billion AI initiative backed by SoftBank and Oracle under former President Donald Trump.
The Wall Street Journal says if the offer is accepted, xAI may be open to merging with the company. OpenAI had last funded itself at US$157 billion and was reported to have SoftBank lead a new investment of US$40 billion funding with a valuation of US$300 billion.
Funding the bid would require significant capital from Musk. His Tesla stock is estimated at around US$165 billion. However, his leverage is limited following his US$44 billion purchase of Twitter (now X) in 2022. Analysts say he may have to sell Tesla shares or use his stake in SpaceX as collateral.
D.A. Davidson analyst Gil Luria noted, “Musk’s offer should significantly complicate OpenAI’s current fundraising and its process of converting into a for-profit corporation. The offer seems to be backed by credible investors, so OpenAI may not be able to ignore it.”
While Altman’s initial response was dismissive, legal and financial experts believe OpenAI’s board must seriously consider Musk’s bid. The nonprofit overseeing OpenAI could face scrutiny if it rejects the offer for a lower valuation. This OpenAI controversy has made it clear that the battle of Musk vs Altman is far from over. It remains to be seen what OpenAI’s future may hold.
