OpenAI’s board has unanimously rejected the ambitious $97.4 billion takeover proposal from Elon Musk, dismissing it as “not a bid at all.”
The decision further escalates tensions between Musk and the artificial intelligence company he helped launch, as he continues his legal battle alleging that OpenAI has abandoned its nonprofit roots.
The bid and its rejection follows Musk’s lawsuit against OpenAI, where he claims the company has shifted away from its original mission of making AI advancements freely available for public benefit.
Instead, he argues, OpenAI has become a commercially driven entity under the influence of Microsoft, which holds an exclusive licensing deal for OpenAI’s most advanced AI models. OpenAI, however, contends that Musk himself once supported commercializing AI research and was part of discussions that led to its current structure before he left the organization in 2018.
This latest development comes amid growing criticism over OpenAI’s governance, particularly following Microsoft’s multibillion-dollar investment and the company’s rapid commercialization of artificial intelligence technology.
Musk’s Proposal and OpenAI’s Response
Musk’s bid, which sought to take control of OpenAI’s nonprofit board—the entity overseeing its for-profit research and commercial arm—was framed as an attempt to restore what he claims was the company’s founding vision.
However, OpenAI’s board rejected the offer outright. In a letter to Musk’s lawyer Marc Toberoff, OpenAI’s attorney, William Savitt, stated: “The much-publicized ‘bid’ is in fact not a bid at all.” The letter from OpenAI’s board further added, “The proposal, even as first presented, is not in the best interest of OAI’s mission and is rejected.” Board Chair Bret Taylor confirmed the decision on X, writing on behalf of the OpenAI Board of Directors.
"OpenAI is not for sale, and the board has unanimously rejected Mr. Musk's latest attempt to disrupt his competition. Any potential reorganization of OpenAI will strengthen our nonprofit and its mission to ensure AGI benefits all of humanity."
— OpenAI Newsroom (@OpenAINewsroom) February 14, 2025
—Bret Taylor, Chair, on behalf of…
The company did not provide further details on why it dismissed the offer so quickly. However, sources familiar with the matter suggest that OpenAI sees Musk’s push as both an attempt to reclaim influence over the company and a broader move to challenge its close relationship with Microsoft.
Mr. Toberoff said in a statement to The New York Times: “This comes as no surprise, given that Altman and board chair Taylor already rejected Musk’s $97 billion bid while stating they had not yet received it. But we are surprised to see the board, which has strict fiduciary duties to carefully consider the bid in good faith on behalf of the charity, use the same kind of deflective double-talk Altman used in testifying to the Senate.”
Legal and Strategic Battle Over OpenAI’s Direction
The failed takeover bid is just the latest episode of Musk’s broader campaign against OpenAI. Last year, he filed a lawsuit against the company, arguing that it has abandoned its original commitment to open-source AI research and is now prioritizing private commercial interests.
The lawsuit alleges that OpenAI has placed its most powerful AI models—including GPT-4—under the exclusive control of Microsoft, effectively turning the organization into a proprietary technology provider rather than an open research institution.
In response, OpenAI has defended its approach, stating that its transition to a “capped-profit” structure was necessary to secure funding for AI development at the scale required to remain competitive. The company’s leadership has pointed out that Musk himself was involved in early discussions about adopting a for-profit model and that he later withdrew financial support, leaving OpenAI to seek funding elsewhere.
Microsoft’s Expanding Role in OpenAI
One of the core arguments in Musk’s legal challenge—and a key factor in his failed takeover—is Microsoft’s growing influence over OpenAI’s operations. The tech giant has invested billions into OpenAI, securing preferred access to its AI models and integrating them into its own enterprise software and cloud computing platforms.
While OpenAI maintains that it operates independently, its financial dependence on Microsoft has drawn criticism. Musk and others argue that the partnership contradicts the company’s original goal of making AI advancements widely available. As part of his lawsuit, Musk is seeking to force OpenAI to revert to its nonprofit model and reduce Microsoft’s influence over its research and technology licensing.
OpenAI’s Governance Structure and the Fight Over Control
At the center of the dispute is OpenAI’s unique governance model, which Musk has repeatedly criticized as a departure from the company’s founding principles. Originally established as a nonprofit, OpenAI later restructured into a “capped-profit” model in 2019, allowing investors to earn returns up to a fixed limit before excess funds are reinvested into research.
Under this structure, OpenAI’s for-profit division remains accountable to the nonprofit board, which Musk sought to take control of through his takeover bid. By gaining influence over this governing entity, he could have dictated OpenAI’s strategic direction and potentially altered its partnership agreements, including its financial relationship with Microsoft.
OpenAI, however, argues that its governance model was necessary to secure the scale of investment required for artificial intelligence research, which demands enormous computational resources. The company maintains that its structure remains aligned with its mission to develop AI that benefits humanity, despite its growing financial ties to major tech firms.
Legal and Financial Stakes in Musk’s Lawsuit
Musk’s lawsuit is not just about OpenAI’s governance but also about its financial structure. He contends that OpenAI’s shift toward commercialization contradicts the agreement made when he co-founded the company. His lawsuit claims that OpenAI has prioritized securing deals with private companies, particularly Microsoft, rather than maintaining open research accessibility.
If Musk’s legal challenge is successful, it could force OpenAI to reconsider its financial model and potentially restructure its corporate partnerships. However, legal experts say Musk’s position is complicated by the fact that he was part of discussions that led to OpenAI’s for-profit shift before he left in 2018. OpenAI’s leadership has pointed out that Musk was once in favor of commercialization but later changed his stance when he was no longer involved with the company.
OpenAI is seeking additional funding, including the recently announced $40 billion round led by SoftBank to further expand its AI research and infrastructure. This would put OpenAI on an even stronger financial footing, making it less dependent on Microsoft’s investments.
The Larger Battle Over AI Industry Control
Musk’s legal battle and takeover attempt are not just about OpenAI. They reflect a broader struggle over who controls the future of artificial intelligence. His concerns about corporate influence over AI research have been echoed by regulators and industry experts who worry that companies like Microsoft, Google, and Amazon could monopolize access to powerful AI models.
At the same time, OpenAI argues that without massive investments from private firms, AI research at the highest level would not be possible. Infrastructure costs alone are projected to reach $9 billion annually by 2026, making private-sector backing essential for continued advancements.
Beyond Microsoft’s role, other AI firms are also making moves in this space. Musk’s own AI startup, xAI, has been positioning itself as a competitor to OpenAI, aiming to build AI models that Musk claims will be more aligned with transparency and open access.
What’s Next for OpenAI?
Despite Musk’s attacks, OpenAI is continuing to expand its AI capabilities. The company has been actively rolling out updates to ChatGPT, while also developing more enterprise-focused AI tools. With Microsoft’s continued support, it remains one of the most dominant players in the AI industry.
Meanwhile, regulatory scrutiny on AI governance is increasing. Lawmakers in the U.S. and the European Union are debating new regulations that could impact how AI companies structure their partnerships and share their research.
OpenAI’s evolving business model may come under further examination as governments look to balance AI innovation with transparency and ethical considerations. For now, OpenAI remains in control of its own future, while Musk’s legal battle continues.
