Elon Musk‘s consortium has indicated it will withdraw its $97.4 billion offer for OpenAI’s non-profit arm if the organization proceeds with plans to transition into a for-profit entity. According to a court filing submitted by Musk’s legal team on Wednesday, the billionaire’s group would back out unless OpenAI agrees to halt its shift from a non-profit structure.
Musk, who co-founded OpenAI before leaving in 2018, has been actively working to prevent the company from becoming a for-profit business. OpenAI, on the other hand, argues that transforming into a for-profit structure is essential for securing the capital required to stay competitive in the rapidly evolving AI sector.
“If the OpenAI board is willing to preserve the charity’s mission and remove its assets from the market by halting the conversion process, Musk will withdraw his bid,” the filing in the U.S. District Court for the Northern District of California stated. Should the conversion proceed, Musk’s legal team insists that the charity must be compensated at a fair market value for its assets.
The filing further emphasized that Musk’s offer is intended to support the charity’s mission, not for private gain.
Musk, who launched a competing AI startup, xAI, in 2023, has not publicly commented on the latest developments. Neither OpenAI nor Musk’s companies, including Tesla and the social media platform X, responded to requests for comment.
According to sources familiar with the matter, OpenAI’s board initially failed to review the bid within 24 hours of receiving it, creating some confusion around the offer. However, the bid has now been officially received.
Sam Altman, OpenAI’s CEO, responded to the bid this week, stating that the non-profit controlling the company is not for sale. He dismissed Musk’s proposal as “ridiculous,” and sources close to the organization indicated that the board plans to reject it, asserting that the non-profit’s mission is to ensure the benefits of AI are directed toward humanity.
In its own court filing, OpenAI countered Musk’s bid, arguing that it contradicts his position in other legal proceedings, where he claims that OpenAI’s assets cannot be transferred for private benefit. The company accused Musk of making an “improper bid” aimed at undermining a competitor.
Musk co-founded OpenAI in 2015 with Altman as a non-profit organization, but he left in 2018 due to disagreements over the company’s direction and funding strategies. Altman subsequently became CEO and established a for-profit division within OpenAI to secure critical funding from investors, including Microsoft.
Altman is now working on plans to restructure the organization, shifting the core business to a for-profit model, although the non-profit entity will still exist and retain a stake in the company. Musk has filed a lawsuit seeking to block this transition.
Experts have noted that Musk’s bid could complicate OpenAI’s efforts to restructure, potentially establishing a high baseline value for the non-profit that could hinder its transformation into a for-profit entity. Concerns have also been raised about whether OpenAI would allocate its assets to the non-profit arm fairly, especially as discussions around the company’s new structure have intensified.
In January, reports revealed that SoftBank Group was in talks to lead a funding round for OpenAI, potentially raising up to $40 billion and valuing the company at $300 billion. This would make the non-profit’s stake in the company significantly valuable.
The ongoing legal and financial battles surrounding OpenAI’s transformation continue to raise questions about the future of the company and its mission in the rapidly changing AI landscape.
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