OpenAI has officially rejected a $97.4 billion bid from Elon Musk-led investors for the company. The ChatGPT maker said the startup company is not for sale and future bids would be disrespectful to its stance.
Recall that X owner, Elon Musk and other investors in his circle submitted a $97.6 billion bid to purchase OpenAI last week. The bid came amidst a series of fallouts between Musk and Open AI’s Sam Altman, with whom he co-founded the company with numerous other individuals back in 2015.
Quoting Chairman Bret Taylor on behalf of the board, the company said on X that:
“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.”
In his response to the offer last Monday, Altman authored a sacarstic X post stating: “No thank you but we will buy Twitter for $9.74 billion if you want,” and told news website Axios that OpenAI was not for sale. In his response, Musk retorted: “swindler.”
The bid also signified an attempt from Musk to prevent the startup from becoming a for-profit firm.
Backing the claim, Musk’s lawyer Marc Toberoff said that OpenAI is putting control of the for-profit enterprise up for sale, and said the move will “enrich its certain board members rather than the charity.”
In late December, OpenAI made plans to restructure its model which will see the company create a public benefit corporation to make it easier to raise more capital and remove the nonprofit restrictions imposed on the startup.
The company argues that the move is significant to secure additional funds and compete in the AI race.
Musk’s position on OpenAI’s bid
The relationship between Altman and Musk has been unpleasant for years. This saw Musk try to block the startup he co-founded and later left from becoming a for-profit firm.
After Musk’s departure in 2019, OpenAI created a for-profit arm that has drawn billions of dollars in funding, sparking allegations from Musk that the startup breached its original mission by putting profit ahead of the larger public good.
Musk sued Altman, OpenAI, and its biggest backer, Microsoft in August last year for alleged breach of contract.
In another development on Wednesday, Musk’s lawyers said the investors would withdraw their bid for OpenAI if it drops plans to become a for-profit entity.
“Two days ago, you filed a pleading in court adding new material conditions to the proposal. As a result of that filing, it is now apparent that your clients’ much publicized ‘bid’ is in fact not a bid at all,” the company’s board said, according to a letter signed by William Savitt, a lawyer representing the company, and sent to Toberoff on Friday.
The company’s board said it is rejecting the bid because its non-profit is not for sale, and the nonprofit board’s mission is to ensure AI benefits humanity, the source added.
It also said in its filing with the same court on Wednesday that Musk’s bid to buy OpenAI contradicts the arguments he is making in court that the startup’s assets cannot be transferred for private gain, calling it “an improper bid to undermine a competitor.”
Other members of the investors’ team are: Baron Capital Group Inc., Valor Management LLC, Atreides Management, LP, Vy Fund III L.P., Emmanuel Capital Management LLC, and Eight Partners VC LLC.
Experts described the bid as a potential “hostile takeover” of OpenAI.
Musk co-founded OpenAI with Altman in 2015 as a non-profit but left in 2018 before the company took off due to differences over its direction and funding sources. Altman then became CEO of the company and launched a for-profit unit within the startup to secure funding from investors such as Microsoft.
