Why Elon Musk's $97 billion bid for OpenAI could disrupt Sam Altman's plans

OpenAI LLC, the for-profit artificial intelligence corporation seeking $40 billion in financing, will likely have a harder time raising money after Elon Musk, owner of xAI, offered on Monday to buy OpenAI Inc., the non-profit that owns OpenAI LLC.

Musk’s bid of $97.4 billion offer was first reported by the Wall Street Journal‘s Jessica Toonkel and Berber Jin, citing a statement by Musk’s attorney Marc Toberoff. 

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OpenAI CEO Sam Altman brushed aside the offer, quipping on X, “No thank you but we will buy Twitter for $9.74 billion if you want.” Altman subsequently took jabs at Musk, telling Bloomberg reporters at the Paris AI summit that Musk is not a “happy person,” and that the bid is a tactic to slow progress at OpenAI, which competes with xAI. 

The effort by Musk seems more likely a tactic to throw into chaos Altman’s effort to raise $40 billion from a group of investors including Japan’s SoftBank Group. The amount of money Musk is offering could set a value for the non-profit — OpenAI Inc. — which could hamper what Altman can get for the for-profit, OpenAI LLC.

As the Journal‘s Jin, Theo Francis, and Tom Dotan explained last September, Altman has already pledged to transform OpenAI LLC from a subsidiary into a standalone, for-profit corporation by 2026. He had to accept this term in return for a $6.5 billion investment made last year by Microsoft and Nvidia. 

To make the LLC independent, Altman essentially has to buy out the non-profit parent. There has yet been no public statement by any of the parties involved on how much the parent company’s assets are worth. 

Musk, by publicly declaring a willingness to pay $97.4 billion, is forcing Altman’s hand, setting a public-market price that Altman would then have to match to get approval from OpenAI Inc.’s board, and from California regulators who are responsible for protecting the value of assets of non-profit entities.

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If OpenAI Inc.’s board were to accept Musk’s offer, then Altman would end up negotiating with Musk, a hostile party, in order to proceed with the LLC’s conversion to a for-profit, infinitely complicating Altman’s path to independence.  

Even if the board were to reject Musk’s offer, the result could be a much harder negotiation for Altman. If the parent, OpenAI Inc., suddenly has a much larger valuation, that means Altman might have to give his new investors smaller stakes in the company, which might alienate the investors, or make do with a smaller amount of money raised, which might not meet Altman’s needs. 

OpenAI LLC has yet to turn a profit, according to reports, and Altman has pledged to help with the cost of the enormous Stargate Project that he is pursuing with SoftBank.

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The tricky situation for Altman was nicely laid out in an article Tuesday by the Journal‘s Dotan and Jin.

Musk’s apparent desire to deeply complicate Altman’s world is the latest chapter in a tech bromance gone sour. Altman and Musk co-founded OpenAI in 2015 with lavish rhetoric about using AI as a force for the good of humanity. 

Musk subsequently left and is suing Altman and the company, claiming that they have departed from the non-profit mission the two originally outlined.

In theory, no corporation, for profit or otherwise, can be forced to accept a buy offer. However, it’s unclear what additional pressures Musk could bring to bear on the situation with his nearly unlimited resources as the wealthiest individual on the planet and his tight relationship with US President Donald Trump.