OpenAI to Introduce Hostile Takeover Defenses Amid Elon Musk’s Efforts

The desire to attract more funds from investors is forcing the OpenAI startup to change its structure, since it is currently headed by a non-profit organization. Investors see it as a potential source of uncertainty, so OpenAI is trying to bring its structure closer to the classic one. At the same time, the board of directors wants to protect the startup from possible hostile takeovers.

Image source: Unsplash, Solen Feyissa

As Reuters notes, citing a publication in the Financial Times, in the new organizational structure, more focused on commercial activities and responsibility to investors, the OpenAI board of directors is expected to have a veto right, which its members can use in the event of a hostile takeover threat.

OpenAI apparently needed such measures in light of Elon Musk’s recent attempts to negotiate a $97.4 billion acquisition of OpenAI. The startup’s board rejected the offer, but if the company were to go commercial, such protections would not be part of the standard board structure. The board’s special voting powers on strategic issues are expected to protect OpenAI from pressure from majority shareholders like Microsoft or SoftBank.

The protection mechanism is reportedly being developed by the board of directors in collaboration with CEO Sam Altman, one of the two founders of OpenAI who is currently close to the company’s management. Elon Musk left the company several years ago, and has since accused its current management of deviating from the original mission. Musk justified his attempt to buy OpenAI for $97.4 billion by the need to “save” the startup, but it is difficult to deny the billionaire’s commercial interest in artificial intelligence. In 2023, he founded his own startup xAI, which is also currently actively developing and attracting investors’ funds.