By Yael Tangir, Business Editor
In a move that shocked the tech industry, Elon Musk recently made a $97.4 billion offer to acquire OpenAI, the firm that created ChatGPT, resulting in a bitter corporate war between him and Sam Altman, the current CEO of OpenAI. Instead of agreeing to Musk’s offer, Altman made a sarcastic counteroffer, joking that he would pay $9.74 billion to acquire Twitter, a small portion of what Musk actually spent to buy it. Musk quickly intensified the back-and-forth, calling Altman a “swindler” and even criticizing him on X, formerly Twitter.
This dramatic event is more than a simple business negotiation; it’s a high-stakes battle that includes lawsuits, social media insults, and a $500 billion AI infrastructure project, and has the potential to drastically alter the technology industry.
The Ideological Division
Musk has long been an advocate for open-source technology and claimed that OpenAI has “strayed” from its original mission. In a statement provided by his lawyer, Musk argued that OpenAI must return to its roots as an open-source, safety-focused company dedicated to the greater good. Altman, on the other hand, is committed to making OpenAI one of the most valuable businesses globally. He puts a higher priority on quick invention and company expansion.
The Origins of OpenAI: A Vision for the Future
Musk and Altman co-founded OpenAI in 2015 to advance Artificial Intelligence (AI) for the good of humanity. OpenAI was founded as a nonprofit organization with the goals of sharing knowledge, guaranteeing transparency, and preventing corporate interests from influencing AI advancement. However, OpenAI needed a new funding mechanism, as the business expanded and the expense of training AI models like GPT skyrocketed. In response, Altman established a hybrid organization that managed a for-profit subsidiary while retaining OpenAI’s nonprofit status. Because of this agreement, the business received significant funding from tech giants like Microsoft.
Altman was left to lead the company after Musk formally stepped down in 2018. With the introduction of ChatGPT in late 2022, the company’s fortune skyrocketed and OpenAI gained international recognition.
The $97.4 Billion Offer
The world went crazy over Musk’s offer of $97.4 billion to buy OpenAI, or more precisely, the nonprofit organization that owns OpenAI. A group of investors led by Musk made the astonishing proposition that OpenAI, which was previously valued at $157 billion in 2024, is predicted to reach $300 billion if a significant new funding agreement with SoftBank goes through.
The Complex Business Structure of OpenAI
The battle between Musk and Altman is about more than personal feelings: it’s about OpenAI’s unusual organizational structure. Over time, OpenAI changed from being a nonprofit to a hybrid organization with a for-profit division, which enabled it to attract massive investments. The nonprofit board still controls the overall mission, and theoretically, it could fire the CEO, as evidenced by the board’s decision to fire Altman in late 2023, only to reinstate him after a complaint from employees and investors.
Musk has criticized this structure, arguing that OpenAI’s transformation into a more traditional, profit-driven entity goes against its original mission. Last August, Musk even filed a lawsuit, accusing Altman and others of abandoning the nonprofit ideals for monetary gain. In the lawsuit, Musk’s legal team framed the issue as “a textbook tale of altruism versus greed.”
Musk’s xAI: A Rival to OpenAI?
Musk also started his own AI business, xAI, in 2023 to go against ChatGPT and other generative AI models. If he were to purchase OpenAI, Musk could eliminate a significant rival and even combine OpenAI with xAI to form the biggest AI company on the planet.
The nonprofit board that oversees OpenAI is required by law to make sure that any assets sold are transferred at fair market value, which presents a legal challenge. While Musk’s offer is huge, the board might not be able to support it, particularly if OpenAI decides to leave its nonprofit organization.
The $500 Billion Stargate AI Project
OpenAI is also involved in the Stargate project, a $500 billion initiative to revolutionize AI infrastructure in the U.S. This project has the backing of major companies, including SoftBank, Oracle and the Emirati sovereign wealth fund MGX. Musk has publicly expressed doubt about whether OpenAI can deliver on this massive commitment. In response to Musk’s skepticism, Altman challenged him to visit the site.
The Future of AI: What’s at Stake?
Musk’s ongoing attempts to acquire OpenAI are most likely a component of a larger plan to change the AI industry to align with his own goals. Musk’s legal team is also promoting the idea that OpenAI must properly compensate the nonprofit organization if it wishes to transform into a for-profit business completely. The nonprofit board of OpenAI will have to defend the sale’s worth if it chooses to sell, which might make the situation much more difficult.
SoftBank’s proposed $40 billion investment in OpenAI would raise its valuation to $300 billion, making it one of the most valuable private companies in the world. Musk’s $97.4 billion bid may be a calculated attempt to distract or slow down this deal, forcing OpenAI to reevaluate its choices.
What’s Next?
Altman has made an effort to convince the public that Musk won’t be able to control OpenAI. Musk has made several attempts to undermine OpenAI’s standing, but Altman has emphasized that the company’s partners, investors, and staff are still dedicated to its goals.
No matter who owns OpenAI, Musk’s challenge on its organizational structure has already had a significant effect, bringing up significant issues regarding AI’s future.
Photo Caption: Musk (left) and Altman (right)
Photo Credit: Wikimedia Commons