OpenAI’s board of directors on Friday rejected a $97.4 billion bid by Elon Musk and a consortium of investors to gain control of the artificial intelligence company, deepening a feud between Mr. Musk and OpenAI’s chief executive, Sam Altman.
In a statement, Bret Taylor, the chairman of the OpenAI board, said, “OpenAI is not for sale, and the board has unanimously rejected Mr. Musk’s latest attempt to disrupt his competition.” Mr. Taylor was referring to Mr. Musk’s own A.I. company, xAI.
OpenAI sent a letter on Friday to Marc Toberoff, the lawyer representing Mr. Musk and the investors making the bid, saying the offer was “not in the best interests of OAI’s mission,” which is to build artificial intelligence that benefits “all of humanity.”
Mr. Musk and other investors made their offer on Monday for the assets of the nonprofit that controls OpenAI. With the bid, Mr. Musk was meddling in a plan that Mr. Altman has made to change OpenAI’s corporate structure. Mr. Altman hopes to shift control of the company to OpenAI’s investors, including 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.”
Mr. Toberoff insisted that OpenAI was indeed putting the nonprofit’s assets up for sale. “They’re just selling it to themselves at a fraction of what Musk has offered, enriching board members,” he said, “rather than the charity in a classic self-dealing transaction.” He added, “Will someone please explain how that benefits ‘all of humanity’?”
Mr. Musk did not immediately respond to a request for comment.
Mr. Musk and Mr. Altman have been at odds for years. Mr. Musk helped create OpenAI as a nonprofit in 2015, along with Mr. Altman and others. In 2018, Mr. Musk left the organization after a battle for control of the company. Mr. Altman then attached OpenAI to a for-profit company so he could raise the billions of dollars needed to build A.I. technologies.
The nonprofit, though, retained control of the company. Last year, Mr. Altman and his colleagues began working on a plan to shift control of the company from the nonprofit to OpenAI’s investors.
Mr. Musk’s $97.4 billion bid could complicate that plan. To separate OpenAI from the nonprofit board, Mr. Altman and his allies must compensate it. OpenAI might pay the nonprofit a one-time fee, for instance, or give it a minority stake in the company.
But the nonprofit’s assets have not been given a value, which was what Mr. Musk was trying to establish with his bid. His offer meant that OpenAI’s for-profit arm would have to spend more to gain independence from the nonprofit.
Mr. Musk also filed a lawsuit in federal court last year to block OpenAI’s plans to restructure.
Robert Bonta, California’s attorney general and a Democrat, said this week in an interview that the state was scrutinizing OpenAI’s plan to shift to a for-profit structure.
“There’s a way to do it right. There’s a way to do it wrong, and we’re monitoring to make sure they do it right,” he said, adding that his office was also closely watching Mr. Musk.
We are “monitoring everything he does,” Mr. Bonta said.
As Mr. Musk battles OpenAI, he is also raising money for xAI. The start-up, which makes a chatbot called Grok, is in talks for a new financing round that could value it at as much as $75 billion, up from about $40 billion just two months ago, two people with knowledge of the discussions said.
The talks are in the early stages, they said, and it’s unclear how much money will be raised. Bloomberg earlier reported the talks.
As recently as December, xAI had raised $6 billion, saying it would use the money to build infrastructure and accelerate research and development. BlackRock, Fidelity, Sequoia Capital and others investors participated in the funding.
(The Times has sued OpenAI and Microsoft for copyright infringement of news content related to A.I. systems. OpenAI and Microsoft have denied those claims.)
The post OpenAI Rejects Elon Musk’s $97.4 Billion Bid for Control of the Company appeared first on New York Times.
