Musk warns won't withdraw $97b bid until OpenAI halts profit shift

Elon Musk has warned that he would not withdraw his unsolicited $97.4 billion offer to take control of OpenAI until Sam Altman, the CEO and former business partner of Musk, halts the nonprofit’s transition into a for-profit entity.

Musk’s legal team filed a court document stating that the bid would be retracted if the OpenAI board agrees to preserve the organization’s original nonprofit mission and cancels plans to convert the entity into a for-profit corporation.

Musk’s bid, which was made alongside a group of private equity and venture investors, aims to acquire the nonprofit that oversees OpenAI, the organization responsible for creating the highly popular AI model, ChatGPT.

OpenAI was founded as a nonprofit in 2015, with a mission to develop artificial intelligence for the benefit of humanity. However, after struggling to raise funds, OpenAI established a hybrid structure in 2019, creating a capped-profit subsidiary to attract investment while still maintaining its original mission.

In December, OpenAI announced plans to convert its for-profit subsidiary into a Delaware-based public benefit corporation to raise more capital. The move was seen as a way to compete with other tech giants like Anthropic and Inflection AI, which are also structured as public benefit corporations. Following this announcement, OpenAI’s nonprofit parent entity would retain ownership of shares in the for-profit company.

The conflict between Musk and Altman is far from new. The two co-founded OpenAI a decade ago, but their relationship soured when Musk’s attempt to take control of the company was rejected.

Musk, who had proposed a merger with Tesla, was unable to gain the level of control he sought, leading to his departure from the company. Tensions between the two men escalated further when Musk filed a lawsuit against OpenAI, largely due to the company’s growing partnership with Microsoft.

Despite the ongoing legal battle, Musk’s latest offer to buy OpenAI could force the board of directors to reconsider the nonprofit’s valuation, potentially impacting the value of its stake in the for-profit subsidiary. Altman has publicly rejected Musk’s offer, posting on X (formerly Twitter) that he was not interested, while Musk called Altman a “swindler.”

In an interview, Altman dismissed Musk’s motives, saying, “Probably his whole life is from a position of insecurity... I feel for the guy.” Musk has continued to criticize Altman’s leadership, while Altman has distanced himself from Musk’s vision for the future of artificial intelligence.

The offer and the related restructuring plans have raised questions about the future direction of OpenAI. As of now, it remains unclear if Musk’s conditions will lead to any changes, as Altman has already firmly rejected the deal. OpenAI did not respond to requests for comment on the matter.