Multiple U.S. media outlets reported on the 10th that a consortium led by billionaire Elon Musk has proposed a $97.4 billion acquisition of OpenAI, the parent company of ChatGPT. As Musk’s xAI intensifies competition with OpenAI and other artificial intelligence companies, the stakes in his battle with Sam Altman over the company behind ChatGPT are escalating. CNN even described it as “a high-stakes bid that could reshape the future of artificial intelligence.”
Altman’s Rejection
According to The Wall Street Journal, Musk’s lawyers revealed on Monday (local time) that they had submitted an acquisition offer to the board of OpenAI’s nonprofit entity. At the same time, Musk issued a statement saying, “It is time for OpenAI to return to its original focus on open-source safety once and for all. We must ensure this becomes a reality.”
After the announcement, OpenAI CEO Sam Altman immediately and publicly rejected the offer. He even fired back at Musk on Musk’s own social media platform, X, saying: “No thanks, but if you’re interested, I could offer $9.74 billion to buy your social media platform.” In doing so, he deliberately moved the decimal point in Musk’s offer one place to the left. Regarding the acquisition news, Altman wrote in an internal message to employees: “Our structure ensures that no individual can control OpenAI… These are just strategies aimed at weakening us because we are making tremendous progress.”
This offer further complicates Altman’s carefully designed future plans for OpenAI, including its transformation into a for-profit company and a $500 billion investment in AI infrastructure through a joint venture called “Stargate.” Last month, Musk criticized this OpenAI-led initiative to build data centers in the U.S. While former President Donald Trump praised the plan as historically significant, Musk made the rare move of dismissing its supporters as people who “actually don’t have the money.”
A Long-Standing Feud
Since co-founding OpenAI in 2015, Musk and Altman have been at odds, particularly over OpenAI’s transition to a for-profit model. In 2019, after Musk left the company and Altman took over as CEO, OpenAI established a for-profit subsidiary, which became the vehicle for raising funds from Microsoft and other investors.
Last year, Musk sued OpenAI, alleging that it had become “a de facto closed-source subsidiary of Microsoft,” betraying its original mission of nonprofit research. In November, he filed another lawsuit, seeking to block OpenAI’s transition into a for-profit entity. Musk’s lawyers revealed that between OpenAI’s founding and 2018, Musk had invested approximately $45 million into the organization.
In December, OpenAI announced a restructuring plan, adopting a public benefit corporation (PBC) model to better attract investments. At the time, OpenAI stated that its board was evaluating a proposal to convert its existing for-profit operations into a Delaware-based PBC, which would oversee the company’s business and operations. Meanwhile, OpenAI’s nonprofit division would continue to exist and retain shares in the PBC at a fair valuation determined by independent financial advisors.
Last week, Musk and OpenAI’s lawyers faced off in a California federal court. U.S. District Judge Yvonne Gonzalez Rogers remarked that Musk’s claim—that failing to block OpenAI’s transition to a for-profit company would cause him “irreparable harm”—was “a bit of a stretch.” Earlier this year, Musk’s lawyers sent letters to officials in both California and Delaware, where OpenAI is headquartered and registered, urging them to publicly auction OpenAI to determine the fair market value of its charitable assets. Musk has maintained a clear stance: OpenAI’s transformation into a for-profit entity likely devalues its nonprofit entity, allowing capital interests to benefit at the expense of public good. According to The Wall Street Journal, if Musk’s investor group successfully acquires OpenAI’s nonprofit entity, it could lead to a potential merger between OpenAI and Musk’s AI company, xAI.
As reported by Politico, OpenAI’s for-profit division must acquire its nonprofit controlling entity’s assets at a fair price to officially become a commercial enterprise. However, Musk’s bold bid could inflate OpenAI’s valuation, potentially forcing the for-profit division to pay a higher price—or requiring the nonprofit organization to justify to regulators why it accepted a lower offer.
“The Boldest Offensive Yet”
Before Musk’s latest move, OpenAI was already under significant pressure. The Wall Street Journal described this as one of the largest transitions from a nonprofit to a for-profit company in history. In December, competitor Meta sent a letter to California officials expressing opposition to OpenAI’s transformation plan. Additionally, OpenAI has been negotiating with Microsoft and other stakeholders regarding the equity distribution they should receive in the new corporate structure.
Recently, OpenAI has been aggressively pushing for new funding, leading to a soaring valuation. In a funding round completed in October last year, OpenAI reached a valuation of $157 billion. During this round, OpenAI committed to completing its transition from a nonprofit entity by the end of 2026. Last month, The Wall Street Journal reported that OpenAI was engaged in new fundraising negotiations, which could push its valuation as high as $300 billion.
According to The New York Times, Musk’s latest move could not only slow down OpenAI’s transition to a for-profit company but also complicate its future fundraising and valuation trends. The publication suggested that this may be Musk’s boldest offensive against OpenAI yet.
The Wall Street Journal also noted that Musk’s actions not only challenge OpenAI’s for-profit transition but could also disrupt Altman’s “Stargate” project. OpenAI and SoftBank have been separately attempting to secure massive funding for Stargate, but Musk’s bid has introduced uncertainty regarding OpenAI’s future, potentially making these fundraising efforts even more difficult.
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