Tesla CEO, Elon Musk, has said he would withdraw his $97.4 billion bid for OpenAI’s non-profit arm if the ChatGPT maker abandons its plans to transition into a for-profit entity.
This condition was given in a court filing submitted by the billionaire’s lawyers on Wednesday.
“If the OpenAI board is prepared to preserve the charity’s mission and stipulate to take the ‘for sale’ sign off its assets by halting its conversion, Musk will withdraw the bid,” the filing stated.
However, if OpenAI proceeds with its for-profit plans, the filing argued that the non-profit must be compensated “by what an arms-length buyer will pay for its assets.”
Musk’s offer was described as a “serious bid” aimed at furthering the charity’s mission.
Musk’s journey with OpenAI
OpenAI was originally established in 2015 as a non-profit organization by Musk and Sam Altman, the current CEO of OpenAI.
- However, Musk exited the company due to disagreements with Altman over its strategic direction. Under Altman’s leadership, OpenAI launched a for-profit arm to attract funding from investors, including Microsoft.
- Altman is now spearheading a plan to restructure OpenAI’s core business into a for-profit entity that would no longer be controlled by its non-profit board.
- While the non-profit arm would continue to exist, it would hold only a minority stake in the new for-profit company. Musk has filed a lawsuit to block this transition, arguing that OpenAI’s assets should not be used for private gain.
Backstory
Earlier this week, a consortium led by Musk made an offer to acquire the non-profit arm in a bid to halt the restructuring.
According to the reports, xAI could merge with OpenAI if the deal proceeds.
Other backers of the proposal include Valor Equity Partners, Baron Capital, Atreides Management, Vy Capital, Joe Lonsdale’s 8VC, and Ari Emanuel through his investment fund. Marc Toberoff, a lawyer representing the investor group, confirmed the bid in a statement but declined further comment.
However, Altman told Reuters on Tuesday that the non-profit is “not for sale.”
OpenAI has also countered Musk’s bid, stating that it contradicts his legal argument against the privatization of the organization’s assets.
What you should know
Musk and Altman have been at odds over OpenAI’s trajectory since its founding. Musk has accused the company of abandoning its original mission as a nonprofit focused on benefiting humanity through open-source and safety-driven AI development.
- OpenAI has denied these claims, attributing Musk’s criticism to his failed attempt to integrate the company into Tesla.
- Since its inception as a nonprofit in 2015, OpenAI has secured billions of dollars in external funding, including a $13 billion investment from Microsoft.
- In a revised lawsuit filed in August, Musk accused OpenAI of forming a “monopoly” with Microsoft, alleging that the partnership aims to stifle competitors like xAI.
- The lawsuit, which now includes 26 legal claims across 107 pages, underscores the deepening rift between Musk and his former venture.