The board of OpenAI has unanimously rejected an acquisition offer led by Elon Musk to buy the artificial intelligence company for $97.4 billion, according to a statement released on Friday.
“OpenAI is not for sale, and the board has unanimously rejected Mr. Musk’s latest attempt to disrupt his competition,” OpenAI board chairman Bret Taylor said in a statement posted on Musk-owned X, formerly Twitter.
Taylor reaffirmed the company’s commitment to its core mission: “Any potential reorganization of OpenAI will strengthen our nonprofit and its mission to ensure AGI (artificial general intelligence) benefits all of humanity.”
Musk’s Legal Action and Offer Withdrawal
Musk, who co-founded OpenAI in 2015, filed court documents on Wednesday indicating he would withdraw his offer unless the company returned to its original nonprofit structure. OpenAI currently operates as a hybrid entity — a nonprofit with a profit-driven subsidiary.
The shift to this model, which OpenAI CEO Sam Altman deems essential for securing the resources needed to advance AI development, has been a point of contention between Musk and the company’s leadership.
Musk had provided $45 million in initial funding during OpenAI’s founding but left the company in 2018. At the time, OpenAI cited a potential conflict of interest as Tesla, Musk’s electric vehicle company, intensified its AI research.
In 2023, Musk launched his own AI venture, xAI, after OpenAI sparked global interest with the release of ChatGPT and its subsequent advancements in generative AI technology.
Fundraising and Governance Challenges
OpenAI’s transition to a more conventional for-profit corporate structure has introduced complexities in its fundraising efforts. The shift requires regulatory approval from California and Delaware authorities, particularly concerning the nonprofit arm’s valuation as it becomes a shareholder in the restructured company.
Musk’s offer, which valued OpenAI at $97.4 billion, exceeds the company’s ongoing fundraising negotiations by approximately $30 billion, according to reports from The Information. This discrepancy has raised concerns that Musk’s bid might be an attempt to disrupt OpenAI’s financial strategy.
Chris Lehane, OpenAI’s Chief Global Affairs Officer, dismissed Musk’s proposal, describing it as a move by a competitor struggling to keep pace with the company’s technological advancements.
“Musk’s offer came from a competitor who has struggled to keep up with the technology and compete with us in the marketplace,” Lehane said.
Industry Implications
The standoff between OpenAI and Musk highlights the growing rivalry within the AI sector as companies race to develop advanced models capable of driving innovations across industries. OpenAI’s hybrid model, while controversial, aims to attract the substantial investment required to maintain its competitive edge.
Musk’s legal challenge and his aggressive bid for OpenAI are likely to intensify discussions around corporate governance and the ethical frameworks guiding AI development. Meanwhile, OpenAI remains steadfast in its commitment to its mission of ensuring that artificial general intelligence benefits humanity as a whole.
Comments