We’ve got some more thoughts on Elon Musk’s $97 billion hostile bid for Sam Altman’s OpenAI, which, we’re told, still hasn’t been delivered to anyone at OpenAI.
Assuming an offer does show up, from a legal standpoint it’s actually dead on arrival. That’s because the board of OpenAI has no legal fiduciary duty to maximize investor returns in the for-profit subsidiary. The only duty the board has is to the charter of the organization, which includes in its mission: “to avoid enabling uses of A.I. or A.G.I. that harm humanity or unduly concentrate power.” It can decide whether an acquirer of its assets would fulfill that mission. So on that score alone, it could simply say no to Musk, as Altman told him in a post on X.
But there’s another play Musk is making: to not-so-subtly persuade the attorneys general of California (where OpenAI is based) and Delaware (where OpenAI is incorporated) to block OpenAI from turning its subsidiary into a for-profit company.
Musk is already suing to do just that — and last week a judge suggested the case was a “stretch.” His offer could be a mechanism to force an attorney general to question whatever valuation the nonprofit arm of OpenAI receives for the for-profit entity. Part of the A.G.’s role is to make sure that nonprofits get “fair value” for their assets.
But Musk’s history of lawsuits against OpenAI and his public comments undermine the credibility of using his bid as a valuation metric. And given his tortured relationship with the states of California and of Delaware (he moved Tesla’s headquarters to Austin and reincorporated in Texas), it seems unlikely he will get a sympathetic ear.
“Maximally transparent”
Last week, President Trump breezily dismissed a Time magazine cover depicting Elon Musk sitting behind the Resolute Desk.
But only a few days later, the tech mogul looked comfortable holding forth from the Oval Office, defending his drastic federal downsizing efforts. It underscored the billionaire’s influence and power in breaking and reshaping the government — and how few limits he appears to face.
Musk claimed that he was rooting out widespread fraud, without providing evidence of any, all in the name of restoring democracy. (Worth remembering: Some of his moves seem to have been based on conspiracy theories.)
He asserted to reporters that “all of our actions are maximally transparent” — even as his team operates largely in secrecy, putting out snippets of its work on his social network, X. Musk himself is an unpaid “special government employee.” That designation allows him to keep confidential for now a mandatory filing of his financial interests, though he waved off any suggestion that his business empire stood to benefit from his new powers.
(Below, we present a graphic showing Musk’s many legal entanglements with the government.)
The optics were extraordinary. Musk, a private citizen, did most of the talking, with Trump chiming in with supportive comments and instructing federal agencies to work closely with the world’s richest man.
Musk repeated a message that he’s made on X in recent weeks: that there’s plenty of room to shrink the federal government and that bureaucrats are an “unelected, fourth, unconstitutional branch of government.” (His critics would note some irony there.)
He appears to have Trump’s full support, especially if it means gutting agencies like the Consumer Financial Protection Bureau or the United States Agency for International Development or taking aim at diversity and equity training programs funded by the Department of Education.
As was the case when he abruptly axed jobs at Twitter after buying the social network in 2022, the layoffs have been messy at times. Some federal employees have been informed twice that they’ve been fired. Musk allowed that mistakes may have been made and said that he’d just reverse some cuts. Another flag: One of Musk’s allies accidentally gained ability to make changes to a sensitive Treasury Department payment database.
Musk is hardly working alone. Trump advisers are reportedly examining whether the Treasury Department can absorb the Federal Deposit Insurance Corporation, The Wall Street Journal reports. Staff members at the bank watchdog are bracing to hear from Musk’s cost-cutting team.
HERE’S WHAT’S HAPPENING
Markets prepare for Wednesday’s inflation reading. The Consumer Price Index report, set for release at 8:30 a.m. Eastern, is expected to show that efforts to bring down inflation remain stalled, with the 12-month headline reading at 2.9 percent. Citing a strong economy and the sticky inflation, Jay Powell, the Fed chair, told the Senate Banking Committee on Tuesday that the central bank was in no hurry to lower interest rates — a position that’s bound to aggravate the White House and frustrate investors.
A.I. exuberance vaults Chinese tech stocks into a bull market. The rally is being led by Alibaba, with the e-commerce giant’s shares jumping more than 8 percent on Wednesday after the company reported progress on its artificial intelligence partnership with Apple. Also, the carmaker BYD announced that it was developing a self-driving feature for its low-cost electric vehicles that would be powered by DeepSeek, a Chinese chatbot maker; shares in Tesla sank on that news.
Goldman Sachs is the latest Wall Street firm to back away from D.E.I. The company said it would shelve a quota that compelled boards to include women and members of minority groups. Other banks are curtailing efforts to recruit Black and Latino employees amid a wider corporate pullback from diversity, equity and inclusion efforts as the policies have come under assault by the Trump administration.
The next stage of the A.I. race is on
After all the discussions and declarations made at this week’s A.I. summit in Paris, one thing is clear: The global race in artificial intelligence is kicking into a higher gear.
Previous international gatherings focused in large part on safety. This time, political and business leaders made clear that a primary goal is to harness the technology’s economic benefits.
Here are the top takeaways.
Governments and investors are opening the money spigot. President Emmanuel Macron of France pledged €110 billion (about $114 billion) to bolster his country’s A.I. industry, while the broader European Union committed €200 billion for an initiative that includes funding for so-called gigafactories to help train A.I. models.
And private investors, led by the venture capital firm General Catalyst, announced the A.I. Champions Initiative for the European Union, which calls for investing €150 billion over the next five years. Jeannette zu Fürstenberg, a General Catalyst managing director, said that the project, which was announced with 60 corporate partners, had already drawn interest from more than 230 potential new members.
“There’s a very, very high sense of urgency,” she told DealBook’s Michael de la Merced.
It represents a mental shift for Europe in particular, zu Fürstenberg said. “The reflex mechanism Europe has had is, ‘Oh, there’s Stargate, we’ve lost,” she noted, referring to the ambitious and expensive OpenAI-led project championed by President Trump.
Now, according to zu Fürstenberg, the European Union recognizes that it needs to think big and build credible rivals to the likes of OpenAI. “We need to make champions,” she said, and described the prevailing attitude: “We want to play to win.”
Where that leaves global cooperation on overseeing the technology is unclear. The United States and Britain refused to sign a statement from the summit pledging an “open,” “inclusive” and “ethical” approach to developing A.I.
That’s perhaps unsurprising, given Vice President JD Vance’s declaration that America would lead and that Europe was at risk of strangling its efforts through overregulation.
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In other A.I. news: SoftBank reported a big quarterly loss as the Japanese tech investor prepares to sink billions into the technology, including a bigger stake in OpenAI.
— President Trump has already pushed out or fired top government officials, some of whom were spearheading investigations, lawsuits or enforcement actions against Elon Musk’s companies. Here’s a look at which of the agencies pursuing Musk have been affected.
The fallout from the S.E.C.’s climate retreat
A lot of companies hated the climate disclosure rule adopted by the S.E.C. last year.
The agency received more than 24,000 comments on the rule, with environmental advocates arguing that the requirements could help investors hold companies accountable for their contributions to climate change and business trade groups accusing the S.E.C. of overstepping its authority.
Officials from Republican-controlled states and the U.S. Chamber of Commerce sued to stop the law, and the S.E.C. agreed to delay the rules from going into effect during the litigation.
Now it seems unlikely that the rule will go into effect at all. On Tuesday, the acting chair of the S.E.C., Mark Uyeda, said he was directing the agency to effectively kill the rule.
Though that might look like a win for big corporations, which grumbled about the difficulties of calculating certain kinds of emissions, most large companies are still subject to impending climate disclosure rules, DealBook’s Sarah Kessler reports.
California has two major climate disclosure laws scheduled to take effect in 2026. They will require large companies with operations in the state to disclose climate-related financial risks and greenhouse gas emissions, including so-called Scope 3 emissions, which are produced by suppliers or consumers of a company’s products. Climate disclosure bills similar to the California laws were recently reintroduced in New York.
The European Union also passed a climate disclosure law that affects U.S. companies. Last year, the bloc began carrying out a law that requires the largest American companies operating in Europe to disclose climate-related data, including Scope 3 emissions.
The bottom line: Large companies may still be on the hook for reporting climate data, Shivaram Rajgopal, a professor at Columbia Business School, told DealBook.
Still, “investors might demand disclosure,” Rajgopal said. Even though U.S. asset managers have backed off from doing so, he added, “European funds are still quite vocal in asking for such data.”
A Trump critic’s new legal perch
Neal Katyal, who has built a reputation as one of President Trump’s most prominent legal critics, has a new job in which he can challenge the government.
Katyal will join the international law firm Milbank, where he’ll lead its appellate practice and is likely to battle the Trump administration, DealBook is first to report. His hiring will likely be watched by the nation’s largest law firms as they try to navigate the tricky politics of this moment.
The tl;dr on Katyal: He was acting U.S. solicitor general during former President Barack Obama’s first term, and he previously served in the Justice Department. Since leaving government, he has taught law at Georgetown University and worked as a partner at Hogan Lovells, where he led the appellate practice once headed by John Roberts, now the chief justice.
Katyal has argued 52 cases, a significant number for those who have presented cases before the court. He has also argued more cases than any minority lawyer in U.S. history, breaking a record held by Thurgood Marshall.
Katyal has spoken out repeatedly against Trump policies, including via frequent appearances on TV: “He will lose in court every day of the week,” he said of Trump’s immigration plans on MSNBC in November. He’s also a prolific presence on social media, where he has challenged a plan to end birthright citizenship.
Prominent New York law firms have started up Supreme Court practices in recent years, moving into territory that was previously the province of Washington rivals. Among those that have jumped in are Paul, Weiss, Rifkind, Wharton & Garrison and Sullivan & Cromwell.
But what does Katyal’s hiring mean for Milbank and for corporate clients, which have included Bristol Myers Squibb and Nvidia? Politics has become an increasingly fraught matter for lawyers, with Elon Musk on Tuesday calling out firms that have challenged Trump policies. (Separately, Sullivan & Cromwell is now representing Trump in his appeal on the New York hush money case.)
THE SPEED READ
Deals
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“How Nissan and Honda’s $60 billion merger talks collapsed” (Reuters)
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KKR is said to have raised around $14 billion of an expected $20 billion for its latest flagship North American buyout fund. (Bloomberg)
Politics, policy and regulation
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The C.E.O. of Ford, Jim Farley, said that President Trump’s metals tariffs and auto policies could force the automaker to lay off workers. (NYT)
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The Federal Aviation Administration is considering major restrictions on helicopters flying anywhere near commercial jets landing or taking off from Ronald Reagan Washington National Airport. (WSJ)
Best of the rest
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“Seeking God, or Peter Thiel, in Silicon Valley” (NYT)
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Why Xiongan, the $93 billion mega city that China’s leader, Xi Jinping, has staked his legacy on, remains mostly empty. (WSJ)
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