Musk Will Drop OpenAI Purchase If It Agrees to Remain Non-Profit

Elon Musk’s consortium will drop its $97.4 billion bid for OpenAI if the ChatGPT maker abandons plans to go for-profit. OpenAI is considering restructuring as a for-profit company because it desperately needs more funding to stay ahead in the AI ​​race. Musk owns rival startup xAI and wants OpenAI to “maintain its mission as a charitable organization.”

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Musk is trying to prevent the OpenAI startup from going commercial. “If the OpenAI board is prepared to maintain the mission of the charity and stipulate that it remove the ‘for sale’ signature from its assets by ceasing to convert them, Musk will withdraw the application,” Musk’s lawyers said in a lawsuit filed yesterday. Otherwise, “the charity should be compensated in the amount of what an independent buyer would pay for its assets.”

Musk co-founded the nonprofit OpenAI with Sam Altman in 2015, but left the company in 2018 over disagreements over its direction and funding sources. Altman has since become OpenAI’s CEO and launched a for-profit arm of the startup to secure funding from investors like Microsoft.

Altman is now working on a plan to restructure the core business into a for-profit company that will no longer be controlled by its nonprofit board of directors. The nonprofit will, however, continue to exist and will own a stake in the for-profit company. Musk is suing precisely to prevent that transition.

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According to Reuters, OpenAI’s board has not yet received a formal offer from Musk’s group. However, OpenAI CEO Sam Altman has previously said that the nonprofit that controls the company is not for sale, calling the offer “ridiculous.”

Several analysts said that regardless of the outcome, Musk’s proposal would complicate OpenAI’s efforts to become a for-profit company because it could set a high minimum price for the nonprofit that oversees the startup.

SoftBank Group is currently in talks to raise up to $40 billion in funding for OpenAI, with the company’s market value around $300 billion.