Elon Musk’s surprise bid for the nonprofit controlling artificial intelligence behemoth OpenAI did exactly what he wanted it to. Announced as OpenAI CEO Sam Altman and other business and world leaders convened in Paris for a global AI summit, the unsolicited $97.4 billion offer for the nonprofit refocused the world’s attention on Musk and his efforts to block OpenAI’s transition to a for-profit company.
An irked Altman quickly dismissed Musk’s offer and sources close to OpenAI say it’s hard to imagine it going anywhere. But even if that’s the case, Musk has likely caused a headache for Altman, who is orchestrating the company’s transition to a for-profit venture. He’s attempted to forcefully raise the nonprofit price – which would make it harder for OpenAI to justify paying anything less.
Musk’s bid is the first hard number that values the nonprofit that controls OpenAI; that entity has to be bought out and become a minority shareholder for OpenAI to successfully transition to a for-profit company. Previously, The Information had reported the nonprofit was worth around $40 billion, citing a 25% stake and the company’s valuation at time. But with his $97.4 billion bid, Musk has backed Altman into a corner; now, as a board member, Altman faces pressure to sell the nonprofit for at least what Musk is asking. If he were to sell for anything less, it’d be a bad look, making it seem like he’s lowballing his own company to reduce share dilution.
“The important part here is that if [the board] doesn’t take it, which they almost certainly won’t, then they’ve made clear that they think the assets Musk is trying to buy are worth more than $97 billion,” a person familiar with the company told Forbes. “So if the for-profit tries to buy them later, the nonprofit will have to get more than that — otherwise the board is likely in breach of their fiduciary duties.”
Nonprofit boards do have fiduciary duties, though their responsibilities are to the organization’s mission, instead of its investors — providing the board grounds to reject Musk’s bid out of hand, if they believe he would damage its mission. But accepting a lower price would also be detrimental to OpenAI’s mission, that person said. Altman reportedly told OpenAI employees that the board — which includes himself, former Salesforce CEO Bret Taylor, Quora CEO Adam D’Angelo and Instacart CEO Fidji Simo — plans to reject the offer.
OpenAI and Musk’s lawyer didn’t respond to requests for comment.
OpenAI was founded by Altman, Musk and others in 2015 as a nonprofit. Then, six years ago, the nonprofit created a for-profit arm to help it raise money and act like a conventional startup. But the company still reported to the nonprofit board, which briefly ousted Altman in 2023 for being “not consistently candid.”
In the last two months, Altman has been publicly working to shed OpenAI’s nonprofit structure entirely. The plan, OpenAI said in December, would be to transform the existing for-profit arm into a “public benefit corporation” that runs the company’s operations and business. The nonprofit, meanwhile, would hire its own leadership team to pursue charity projects, and have a significant stake in the new public benefit corporation, “at a fair valuation determined by independent financial advisors.”
The company will reportedly be worth $260 billion after a $40 billion investment from Japanese tech conglomerate Softbank. Some have criticized Altman’s role in selling the nonprofit arm as a conflict of interest, as Altman is negotiating on both sides of the deal.
Musk’s bid will now invite more scrutiny. It could get the attention of state regulators like California Attorney General Rob Bonta, who has jurisdiction over OpenAI because it is headquartered in the state, spurring him to block a deal that values the non-profit at too low a price. Bonta’s office did not respond to a request for comment.
Musk’s bid is the latest salvo in a long feud between him and Altman. Musk left OpenAI three years after its founding because of an internal power struggle. Since then, Musk, whose startup xAI competes with OpenAI, has sued the company twice, accusing it of abandoning its mission to build artificial intelligence to benefit humanity. (His latest suit was in August, after withdrawing a similar one in June.) OpenAI has replied by publishing emails allegedly from Musk saying he wanted a for-profit structure in 2017.
Others have criticized Musk’s maneuvering as counter-programming while Altman was in Paris with Vice President J.D. Vance and other prominent leaders. “Another sad play for attention,” one former OpenAI insider told Forbes.
