February 11, 2025 – In a move set to disrupt the AI landscape, Elon Musk, the billionaire entrepreneur behind companies like Tesla and SpaceX, has spearheaded a consortium offering $97.4 billion to purchase the nonprofit that controls OpenAI. This bid represents Musk’s latest attempt to block OpenAI’s transition into a for-profit entity, a shift that has sparked tensions with OpenAI CEO Sam Altman and raised concerns about the future direction of the influential AI startup.
Musk’s bid is not a sudden development. It adds fuel to a long-standing dispute between the tech mogul and OpenAI, especially as the company navigates its shift from a nonprofit model to a for-profit structure. OpenAI has argued that the transition is necessary to secure the substantial capital required to continue advancing AI technology, particularly in the highly competitive field of generative AI, which is exemplified by the groundbreaking ChatGPT model.
In response to Musk’s $97.4 billion offer, Altman dismissed the proposal with a playful jab on X (formerly Twitter): “No thank you, but we will buy Twitter for $9.74 billion if you want.” This exchange highlights the strained relationship between the two, which began in 2015 when Musk co-founded OpenAI with Altman. Although Musk initially played a significant role in the nonprofit, he left the organization before it gained significant traction, going on to found his own AI company, xAI, in 2023.
Musk has made his opposition to OpenAI’s transition to a for-profit company clear. He filed a lawsuit against Altman and other OpenAI executives in August 2024, claiming that they had violated the organization’s original mission to prioritize the public good. Musk’s legal battle seeks to block OpenAI from converting into a for-profit company, arguing that the nonprofit should remain dedicated to advancing AI in a way that benefits humanity.
“Time for OpenAI to return to the open-source, safety-focused force for good it once was,” Musk stated in a recent press release. “We will make sure that happens.”
Meanwhile, Altman has emphasized that the OpenAI board has no interest in Musk’s offer, according to a report by The Information. Despite the pushback, Musk’s bid could potentially alter the trajectory of OpenAI, especially considering the backing of his consortium, which includes his own AI startup xAI, investment firms like Baron Capital Group and Emanuel Capital, and others.
One of the intriguing aspects of Musk’s offer is the possibility of a merger between xAI and OpenAI. The merger idea was first reported by the Wall Street Journal, which suggested that such a move could result in the consolidation of AI power under Musk’s control. xAI recently raised $6 billion from investors, bringing its valuation to $40 billion, which positions it as a formidable player in the AI field.
OpenAI, on the other hand, was valued at $157 billion in its last funding round, cementing its status as one of the world’s most valuable private companies. The company is currently in discussions with SoftBank Group for a potential funding round of up to $40 billion, which would push OpenAI’s valuation to $300 billion, Reuters reported in January 2025.
The immense size of Musk’s offer raises concerns regarding its feasibility. To finance such a deal, Musk would likely need to leverage his significant holdings in Tesla, which are valued at around $165 billion. However, his ability to secure financing could be limited due to his $44 billion acquisition of X (formerly Twitter) in 2022. Experts suggest that Musk could consider selling part of his Tesla stock, taking a loan against it, or using his SpaceX stake as collateral to raise the necessary funds.
While Musk’s bid poses challenges for OpenAI, it also complicates the company’s current fundraising efforts and its transition into a for-profit organization. Analysts, such as Gil Luria from D.A. Davidson, suggest that Musk’s offer could prompt OpenAI’s board to reconsider their current plans. “It will be the fiduciary responsibility of OpenAI’s board to decide whether this is a better offer,” Luria noted, casting doubt on the upcoming deal with SoftBank.
As the battle over OpenAI’s future continues to unfold, Musk’s bid signals a new chapter in the ongoing competition and consolidation within the rapidly evolving AI ecosystem. Whether OpenAI will remain independent or merge with Musk’s xAI will be a key development to watch in the tech world, as the power struggle over the direction of artificial intelligence intensifies.