Startup Lagos

25-Feb-2025

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Elon Musk Leads Group to Buy OpenAI for $97.4 Billion 2 months ago

Elon Musk is spearheading an investment group offering $97.4 billion to acquire the nonprofit organization that oversees OpenAI. This move marks a significant development in Musk's ongoing rivalry with the company that created ChatGPT, according to a report by the Wall Street Journal published on Monday.

Musk's attorney, Marc Toberoff, has reportedly submitted the bid to OpenAI's board of directors. In an apparent response to the offer, OpenAI CEO Sam Altman quipped on X, formerly Twitter, "No thank you, but we will buy Twitter for $9.74 billion if you want."

Musk, who acquired X for $44 billion in 2022, responded with a succinct retort on Altman's post, stating, "Swindler." There was no immediate response from Musk's attorney regarding the bid.

The proposal comes amid a backdrop of escalating tensions between Musk and Altman, which have resulted in multiple lawsuits filed by Musk against the San Francisco-based OpenAI. Musk co-founded OpenAI in 2015; however, he departed the organization in 2018, after which it quickly emerged as a leader in the AI sector. In response to his departure from OpenAI, Musk launched his own generative AI startup, xAI, in 2023.

In a blog post released in December, OpenAI described a new organizational structure: a for-profit entity controlled by a nonprofit, which will feature a capped profit share for investors and employees. This strategic shift aims to balance the interests of shareholders, stakeholders, and the public, moving away from the traditional nonprofit model.

Musk's establishment of xAI in early 2023 reflects his ambition to secure a strategic position within the transformative AI landscape, a technology poised to reshape various aspects of daily life and work.

Although OpenAI ranks among the world's most highly valued startups, the organization has struggled financially, facing substantial losses attributed to the high costs of developing its advanced technologies.

In a related development, former President Donald Trump announced in January a major investment initiative aimed at enhancing AI infrastructure in the United States. The project, named Stargate, will involve partnerships with Japanese conglomerate SoftBank, cloud leader Oracle, and OpenAI. Trump stated that the venture aims to invest "at least $500 billion" in AI infrastructure.

Attendees at the announcement included OpenAI co-founder and CEO Altman, SoftBank chief Masayoshi Son, and Oracle founder Larry Ellison. However, Musk expressed skepticism about the financial commitments tied to the Stargate initiative, suggesting that the promised investment may not materialize. This marked a rare public divergence between Musk and Trump, considering Musk's substantial financial backing of the former president's election campaign, totaling $270 million.

As the situation unfolds, the implications of Musk's bid for OpenAI and the ongoing developments in the AI sector remain to be seen.

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