Elon Musk, backed by a consortium of investors, has made a $97.4 billion offer to acquire OpenAI’s nonprofit division, according to The Wall Street Journal.
The OpenAI Nonprofit is currently the overall governing body for all OpenAI activities. It wholly owns and controls a manager entity (OpenAI GP LLC) that has the power to govern the for-profit subsidiary. This structure ensures that the nonprofit’s charitable purposes guide the entire operation, including the for-profit entities.
The nonprofit’s board is also legally bound to perform their fiduciary duties in furtherance of OpenAI’s mission: developing safe artificial general intelligence (AGI) that is broadly beneficial.
Musk’s unsolicited bid challenges OpenAI CEO Sam Altman’s plans to transform the organization into a fully for-profit entity. The offered amount of $97.4 billion is far below the currently $260 billion pre-money valuation of SoftBank’s recently announced $40 billion primary investment into OpenAI. However, Musk’s involvement with the US government could also lead to surprising outcomes.
Musk, through his lawyer Marc Toberoff, framed the proposal as an attempt to return OpenAI to its founding mission. “It’s time for OpenAI to return to the open-source, safety-focused force for good it once was,” Musk declared in a statement accompanying the bid.
Musk’s offer introduces uncertainty into OpenAI’s already complex restructuring efforts, which involve converting its for-profit subsidiary into a Public Benefit Corporation (PBC).
This new structure, OpenAI claims, will allow it to balance financial growth with its commitment to societal benefit. However, Musk has voiced concerns that the move risks undervaluing OpenAI’s nonprofit assets and aligning the organization too closely with corporate interests and sued OpenAI over disagreements.
Musk’s lawsuit, which he initially filed in March 2024 and refiled in August of the same year, accuses OpenAI of abandoning its nonprofit origins and aligning with powerful industry players like Microsoft to achieve market dominance.
In a first reponse to Musk’s takeover attempt, OpenAI CEO Sam Altman dismissed the buyout offer on X with an ironical remark about Musk’s acquisition of Twitter, hinting to the alleged loss in value of the social media platform and that OpenAI would consider taking over the platform for $9.74 billion. Musk Himself had paid $44 billion.
no thank you but we will buy twitter for $9.74 billion if you want
— Sam Altman (@sama) February 10, 2025
The Roots of the Dispute
OpenAI was founded in 2015 as a nonprofit focused on ensuring artificial intelligence (AI) benefits humanity.
In 2019, the organization adopted a capped-profit model, enabling it to attract major investors like Microsoft. Microsoft’s $13 billion investment in OpenAI has given the tech giant exclusive rights to key AI technologies. The company has integrated OpenAI’s technology into its products, including the Azure OpenAI Service and Microsoft 365 Copilot.
These agreements have drawn criticism from stakeholders who believe they compromise OpenAI’s independence. Musk, in particular, has accused OpenAI of operating as a “de facto Microsoft subsidiary.”
OpenAI, however, defends these partnerships as necessary to sustain its research and scale its infrastructure. Altman has reiterated that OpenAI’s partnerships with companies like Microsoft are also essential to its mission of advancing Artificial General Intelligence (AGI).
According to previously undisclosed documents released by OpenAI in December, Musk initially supported the transition to a for-profit model but later withdrew after failing to secure control of the organization.
Musk and other critics argue that these agreements prioritize corporate interests over OpenAI’s nonprofit mission.
Encode, a nonprofit supporting Musk’s legal case against OpenAI, described the situation starkly: “Control over the development and deployment of AGI is a charitable asset that should not be sold for any price.” Musk has similarly expressed concerns, accusing OpenAI of functioning as a “de facto Microsoft subsidiary.”
For Altman and OpenAI, financial pressures have made these partnerships basically a lifeline. The organization’s costs, driven by its infrastructure needs, are expected to exceed $9 billion annually by 2026.
To address these challenges, OpenAI has sought additional funding, including the recently announced $40 billion round led by SoftBank. However, Musk disrupts these plans, adding a new layer of complexity to the organization’s financial future.
Musk’s Vision and the Role of xAI
Elon Musk’s bid for OpenAI aligns closely with his ambitions for xAI, the artificial intelligence company he launched in 2024. Positioned as a competitor to OpenAI, xAI leverages proprietary data from Musk’s other ventures, such as Tesla’s autonomous systems, to develop cutting-edge AI models.
Backed by $6 billion in investments, xAI has emerged as a rival to OpenAI’s flagship tools, including ChatGPT.
If Musk’s acquisition is successful, he intends to merge OpenAI with xAI, creating a unified entity that could dominate the AI landscape.
Musk’s critics have argued a long time that his vision prioritizes control over collaboration, tensions that dates back to his departure from OpenAI’s board in 2018.
Emails released during legal proceedings revealed that Musk sought centralized decision-making authority to steer OpenAI’s direction, a stance that clashed with Altman’s preference for a more collaborative governance model.
Ethical and Industry-Wide Implications
Critics supporting Musk argue that OpenAI’s pivot to a for-profit model reflects broader industry trends where corporate interests increasingly influence AI development.
OpenAi’s agreements with Microsoft, while providing much-needed funding, have raised questions about whether OpenAI can remain independent. Meanwhile, other stakeholders in the AI industry, such as Meta, have voiced concerns about OpenAI’s restructuring, with some even opposing its plans in formal filings.
With his offer, Musk’s is reigniting not only debates about the ethical governance of artificial intelligence, but also over his growing influence in the Trump administration.
Musk’s role in the Department of Government Efficiency (DOGE) has positioned him as a powerful figure in federal operations, granting him unprecedented access to sensitive government data and systems.
His dual roles—as a federal government advisor and a major player in the private tech industry—have intensified scrutiny over potential conflicts of interest. Musk’s use of X, which he owns, to promote administration policies and counter critics further highlights how he leverages his influence across sectors.
Musk’s expanding influence in federal government operations—such as accessing payment systems and restructuring key agencies—raises ethical concerns about consolidating control over both public and private AI development.
How his buyout offer will fit into president Trump’s Stargate Project AI initiative with OpenAI and Softbank, remains to be seen. The project, announced during a White House event, aims to develop large-scale artificial intelligence infrastructure across the United States, with an initial $100 billion investment focused on building data centers in Texas.
Musk has openly questioned the feasibility of the initiative, calling into doubt the financial readiness of its participants. Despite Musk’s public dissent, Trump defended the initiative, dismissing Musk’s remarks as stemming from personal conflicts. He sought to downplay Musk’s critique, attributing it to personal grievances rather than substantive concerns.
The outcome of the battle between Musk and OpenAI could have far-reaching implications not only for the AI industry. If Musk succeeds, his merger of OpenAI with xAI could establish a new paradigm for private AI companies, blending his competitive drive with a more centralized governance approach.
