Elon Musk’s $97.4B Bid for OpenAI Rejected—Board Stands Firm!

OpenAI’s board unanimously rejected Elon Musk’s $97.4 billion acquisition bid, reaffirming that the company is not for sale. Musk, along with key investors, aimed to revert Open Artificial Intelligence to an open-source, safety-focused model but faced strong opposition. The bid complicates OpenAI’s restructuring efforts as it negotiates a massive funding round with SoftBank.

Elon Musk’s $97.4B Bid for OpenAI Rejected—Board Stands Firm!

OpenAI’s board of directors has firmly rejected a $97.4 billion acquisition proposal from Elon Musk and a consortium of investors. The board emphasized that OpenAI is not for sale, calling Musk’s bid an attempt to disrupt a competing AI company.

Bret Taylor, OpenAI’s chairman, issued a statement on Friday reaffirming the board’s stance. He asserted that OpenAI remains committed to its mission and dismissed Musk’s attempt as a challenge to its independence.

Musk, who co-founded OpenAI nearly ten years ago before parting ways and establishing a rival AI venture, collaborated with investors such as Valor Equity Partners, Baron Capital, Atreides Management, Vy Capital, 8VC’s Joe Lonsdale, and Ari Emanuel’s investment fund. Musk stated that his goal was to restore Open Artificial Intelligence to its original vision—an open-source, safety-oriented organization prioritizing public welfare.

However, Open Artificial Intelligence CEO Sam Altman quickly dismissed the bid, labeling it as an effort by a competitor to hinder OpenAI’s progress. He reiterated that the organization is not on the market. Additionally, Andrew Nussbaum, legal counsel for Open Artificial Intelligence’s board, reinforced this sentiment, noting that the board’s primary obligation is to uphold OpenAI’s mission of developing artificial general intelligence (AGI) for humanity’s benefit. He pointed out that it was not for a competitor to dictate what serves OpenAI’s best interests.

Musk has persistently opposed Open Artificial Intelligence’s transition toward a more conventional for-profit model. He has filed lawsuits claiming that the company has deviated from its founding objectives and requested that the court intervene to block OpenAI’s restructuring. However, a judge has been hesitant to grant an injunction, characterizing the dispute as a case of “billionaires versus billionaires.”

Following Musk’s acquisition attempt, OpenAI countered in a legal filing that his bid directly contradicted his own lawsuit, which argues that OpenAI’s assets should not be transferred for private profit. Musk’s legal team later stated that he would withdraw his proposal if Open Artificial Intelligence agreed to halt its conversion into a for-profit entity.

Taylor, in response to the legal battle and the acquisition bid, reassured stakeholders that any structural reorganization of Open Artificial Intelligence would serve to fortify its nonprofit mission and ensure AGI’s benefits reach all of humanity.

Musk’s proposal comes at a pivotal time for Open Artificial Intelligence, as it negotiates with SoftBank Group Corp. on a major funding round that could value the company at as much as $300 billion. Currently, Open Artificial Intelligence operates a for-profit subsidiary under the governance of its nonprofit board. The proposed corporate restructuring includes compensating the nonprofit for its assets, with Open Artificial Intelligence previously suggesting that the nonprofit would receive equity as compensation.

Regulatory experts have indicated that officials will closely monitor how much stake the nonprofit retains. Musk’s multibillion-dollar offer may set a precedent for determining the minimum valuation Open Artificial Intelligence assigns to its nonprofit segment.

Stanford Law School professor Robert Bartlett, who co-directs the Rock Center for Corporate Governance, supported Open Artificial Intelligence’s decision to reject Musk’s offer. However, he cautioned that the bid could influence how Open Artificial Intelligence values its assets. If Open Artificial Intelligence attributes a higher valuation to its nonprofit entity, it could lead to dilution of equity for existing and future investors.

Ultimately, Musk’s unsolicited proposal introduces complexities into Open Artificial Intelligence’s restructuring process. As the organization seeks new investments and transitions its corporate structure, its valuation decisions will likely shape its future relationships with investors and regulators.