Musk's Bid for OpenAl: Failed Bid or Sly Scheme
On February 10 2025, Elon Musk, alongside a group of investors, made an unsolicited offer to acquire OpenAI’s non-profit branch for $97.4 (£78.4) billion. The bid marks a new chapter in the Musk-Altman feud.
Some History
A decade in the making, this tale traces its roots to 2015 with the founding of Open AI, originally a non-profit. A group of tech visionaries, including Sam Altman, Elon Musk, Ilya Sutskever, Reid Hoffman, and Greg Brockman, shared a collective vision of developing AI to benefit everyone. This collaboration for a shared goal would not stand the test of time, however. In early 2018, Musk, believing the non-profit to have fallen behind competitor Google, proposed to take control of OpenAI to run it himself. The other founders rejected his proposal, and Musk announced his departure on February 20 2018. Here, the infamous rift between Altman and Musk began.
In 2019, OpenAI created a for-profit subsidiary on March 11 2019, obtaining a $1 billion investment from tech giant Microsoft less than six months later, a trend that would continue with Microsoft’s investments growing to a multi-year and multi-billion investment partnership in 2023. This sharp and sudden reversal in business form sparked controversy, however, to stick true to their roots, OpenAI capped the profit their investors could earn to 100 times what they invested, a first in Silicon Valley, with profits exceeding this ceiling being dedicated to the non-profit.
The feud would not rest on its laurels. With the close of 2022 came a further development. Musk’s 2022 acquisition of Twitter (for the keen-eyed commercially aware, yes, it was Skadden who advised on this) brought with it a fresh swipe at his former partners. In December of that year, Musk revoked OpenAI’s access to X, just a month post-launch of ChatGPT.
The change in business form comprises the basis of Musk’s 2024 suits against OpenAI, the first in March having been withdrawn, replaced by a November lawsuit containing stunning language including accusations that OpenAI morphed from a “tax-exempt charity to a $157bn (£124bn) for-profit, market-paralysing gorgon” and because “of their unlawful actions, [the] defendants have been unjustly enriched to the tune of hundreds of billions of dollars in value, while Mr Musk has been conned along with the public.” It is worth noting that Musk’s own xAI, founded after his departure, is a direct competitor, which the suit claims has fallen victim to the monopoly established by Microsoft and OpenAI. Furthermore, these claims have resurfaced the very week President Trump announced Musk’s role in the government’s efficiency department.
The Present Predicament
On February 10 2025, Musk, at the helm of a band of investors, made an unsolicited offer of $97.4 (£78.4) billion for the non-profit arm of OpenAI. Although it is unclear whether this went to OpenAI’s counsel or the board themselves, Altman hit back on X with “No thank you, but we will buy twitter for $9.74 billion if you want.” Remember Musk’s acquisition of the then Twitter, which cost $44 billion. To rub salt in the wound, he did so on Musk’s very own platform, calling it by its old name, without bothering to capitalise it, with a counter offer a tenth of his asking price for OpenAI, for Musk’s social media platform. Moreover, being a fifth of the cost of X, clearly Altman not only wanted to play with the orders of magnitude, but also indicated that OpenAI is worth much more, perhaps in the realm of half a trillion. Even in light of DeepSeek’s launch, SoftBank valued OpenAI at $300 billion. This raises the question as to why Musk is undercutting this valuation by a third. It could be because the valuation, at the time of writing, has not gone through. More likely, it is Musk only wishing to acquire the non-profit branch, or as has been suggested, a tool of negotiation.
This brings us nicely to yet another twist. On February 12 2025, Musk’s lawyers stated Musk would withdraw the bid if OpenAI committed to being a non-profit. Musk’s “serious offer” is to compensate for the charity’s assets that would become non-profit in nature.
But why now? Did Musk smell blood on the advent of DeepSeek? Maybe. Or does this offer form part of Musk’s wider plan to consolidate the tech market, least of all in light of his lawsuit?
On February 14, OpenAI’s board unanimously rejected Musk’s offer. “OpenAI is not for sale, and the board has unanimously rejected Mr. Musk’s latest attempt to disrupt his competition”, Bret Taylor, the chair of the board, posted on X.
This still begs the question: what were Musk’s motives? Were they to disrupt competition, part of an ancient feud, or was something else at play?
February 17 brought our answer. The launch of Grok 3 one-week post-offer must correlate. Indeed, this might be seen as an attempt to undermine the competition, yet the rich and convoluted history brings a sense of rivalry to the table. This will remain just one episode in a series that the future shall televise.
By Kyle Scotton
