Elon Musk simply lobbed yet one more grenade at OpenAI.
Final week, the billionaire and a gaggle of buyers—together with his AI firm xAI, the funding agency Vy Capital, and Hollywood mogul Ari Emanuel—provided a jaw-dropping $97.4 billion to purchase the nonprofit that legally controls OpenAI.
The difficulty? OpenAI needs nothing to do with it.
CEO Sam Altman dismissed the provide outright on X with a mocking counterproposal to purchase the platform from Musk for $9.74 billion as a substitute. Musk fired again with a single phrase: “Swindler.”
And the OpenAI board swiftly and unanimously rejected the bid.
What’s actually happening right here? Why is Musk so intent on disrupting OpenAI? And the way does this all tie again to one in every of Silicon Valley’s most intricate company buildings?
I bought the solutions from Advertising AI Institute founder and CEO Paul Roetzer on Episode 136 of The Synthetic Intelligence Present.
A $97.4 Billion Bid for a Nonprofit
First, let’s make clear why Musk’s bid is so putting: He’s making an attempt to accumulate the nonprofit entity that also holds authorized management over OpenAI. Sure, OpenAI operates a for-profit firm today. However from a authorized standpoint, the unique nonprofit stays in cost.
That’s an enormous deal as a result of Musk’s huge provide out of the blue throws a wrench into OpenAI’s plan to “purchase out” the nonprofit. As a part of the for-profit transition, OpenAI has been exploring the best way to compensate the nonprofit pretty for its management. For those who’re the nonprofit’s board, you now have a contemporary headache in your palms: Musk’s $97.4 billion units a sky-high benchmark you’d have to clarify turning down.
None of this helps OpenAI’s present fundraising push. The corporate is in the midst of finalizing a brand new $40 billion spherical led by SoftBank—one that might almost double OpenAI’s valuation to $300 billion from only a few months in the past, making it one of many world’s most beneficial personal firms.
Cue Elon Musk, who drops his $97.4 billion bombshell proper in the midst of these talks.
The place Did the Dangerous Blood Come From?
OpenAI and Elon Musk have a historical past.
Musk co-founded OpenAI again in 2015. However by 2019, tensions exploded behind the scenes. Musk needed a for-profit transition sooner—and even tried rolling OpenAI into Tesla. He misplaced an influence wrestle to Sam Altman, left OpenAI, and has been throwing rocks from the sidelines ever since.
That rocky relationship bought private this 12 months when Sam Altman publicly stated he thought Musk was appearing out of “insecurity” and stated he wished Musk would compete by “constructing a greater product” as a substitute of stirring up drama.
“Elon feels wronged, and that does not finish properly,” says Roetzer.
A Complicated—and Complicated—Company Construction
A part of what makes Musk’s provide so disruptive is the weird construction of OpenAI itself.
Formally, the nonprofit board retains authorized management. The for-profit arm handles product launches and large fundraising. To totally go for-profit, Sam Altman and co. must do some monetary gymnastics to compensate (or purchase out) that nonprofit. That’s why you see discuss of giving the nonprofit a 25% fairness stake within the new for-profit. However in walks Elon, waving $97.4 billion, and which may elevate the worth.
It’s all about making certain the nonprofit is compensated pretty for giving up management. And Musk’s unsolicited provide muddies the water significantly.
Is Musk Severe or Simply Trolling?
So, is Musk truly making an attempt to purchase OpenAI…or simply messing with them?
“I do not assume he truly thinks he is going to have the ability to purchase OpenAI,” says Roetzer. “I believe it is largely an try to muddy up the waters and create friction for OpenAI.”
“He is aware of he can’t realistically purchase OpenAI. He’s simply making an attempt to create friction, artificially inflate the corporate’s worth, and gradual them down.”
Musk seems content material to spark chaos. He’s already sued OpenAI, claiming it violated its nonprofit mandate. A choose just lately hinted at siding with OpenAI in that go well with, which can be why Musk pivoted to this new, high-profile strategy.
“His attorneys in all probability have a bunch of bullets within the chamber,” Roetzer says. That is simply the most recent tactic to make life more durable for OpenAI, in order that Musk’s personal AI firm can achieve a bonus.
What’s Subsequent for OpenAI (and the Remainder of Us)?
In the end, the OpenAI board has already rejected Musk’s bid, so don’t anticipate a serious possession change. However the fireworks aren’t over. Musk’s potential (and need) to fire up battle is obvious—and he’s concurrently launching new fashions at xAI to compete straight with OpenAI’s ChatGPT.
OpenAI, in the meantime, is forging forward with a $40 billion fundraising spherical. They’re making an attempt to untangle their nonprofit construction, finalize an enormous valuation leap, and preserve launching frontier AI fashions—all whereas heading off Musk’s interference.
Buckle up. As a result of in terms of OpenAI and Elon Musk, this received’t be the final high-stakes stunt we see. And it’s solely getting extra private from right here.
“I don’t assume he will cease,” says Roetzer. “He has no motive to. I believe he finds it amusing and he has the assets to do it.”
