OpenAI is not accepting a possible nearly $100 billion bid that Elon Musk and other investors have made for the AI startup. The reason for the bid would be that Musk would want OpenAI’s LLMs to become open-source again.
The $97.4 billion bid for OpenAI was announced yesterday by business newspaper the Wall Street Journal. Besides Tesla, SpaceX, X, Neurolink owner and Trump confidant Elon Musk, the bid is backed by his own AI company xAI, several investment funds, including Valor Equity Partners, Baron Capital, Atreides Management, Vy Capital, 8VC of Palantir co-founder Joe Lonsdale and the investment fund of Ari Emanuel, CEO of Endeavor.
According to the lawyer for these investors, OpenAI needs to make its models open-source again and focus more, as before, on secure AI development. And these investors are going to take care of that regardless, the lawyer threatens. Ultimately, the acquisition should lead to a possible merger between xAI and OpenAI.
The consortium is willing to go all out and perhaps outbid its own bid. Early this year, the investors had already sent a letter to the responsible authorities in the states of California and Delaware asking whether they would allow open bids for the AI giant.
Reaction Sam Altman
In an initial response on Musk’s social media platform, CEO Sam Altman immediately let it be known that a takeover is not going to happen. Instead, he “taunts” Musk that with the 9.74 billion OpenAI might well buy “Twitter,” the former name of the X platform.
Conflict around commercial strategy
Elon Musk is among the original founders of OpenAI, but left the startup in 2019. Sam Altman then became CEO. For some time, Musk and OpenAI have been embroiled in a lawsuit over the direction the AI giant should take.
The commercial arm of OpenAI, which was used for investments by Microsoft and other companies, Altman wants to transform it into a normal commercial company. In the process, the non-profit branch would be spun off and eventually house the shares for the “normal” commercial company.
The feud between Musk and Altman revolves mainly around the value of the nonprofit branch. After all, whoever has the most shares in it ultimately controls OpenAI’s commercial operations.
The AI tech giant has been in talks with various investors for some time to determine the value of the company and how many shares they would receive in the new commercial company before the transition. Musk’s bid only increases the value, so it needs to raise more money to financially compensate investors from the nonprofit branch.
Problem for Stargate deal
Elon Musk’s bid could also potentially create problems for the recent Stargate deal of as much as $500 billion that OpenAI recently struck with the Trump administration. Under this deal, the AI giant will invest in building AI data centers in the US.
For these investments, it is obviously also very important to know the value of (the new) OpenAI. Elon Musk, who was not involved in the deal, immediately indicated that OpenAI did not have the money for this to realize this plan.
Also read: Musk again challenges OpenAI profitability