OpenAI Rejects Elon Musk's Bid - Board Decision

OpenAI Rejects Elon Musk’s Acquisition Offer

The board of directors at OpenAI has definitively declined an offer from Elon Musk to purchase the nonprofit organization that governs the company. This rejection was communicated on Friday.

Board’s Statement on the Offer

Bret Taylor, chair of the OpenAI board, released a statement through OpenAI’s official X account. He characterized Musk’s proposal as a deliberate effort to hinder competitive endeavors.

“OpenAI is not available for purchase,” Taylor stated. “The board has reached a unanimous decision to reject Mr. Musk’s latest attempt to disrupt his competition.” He further emphasized that any future restructuring will prioritize strengthening the nonprofit and its core mission: ensuring that artificial general intelligence benefits all of humankind.

Details of the Rejected Bid

According to reports in The New York Times, OpenAI also conveyed to Marc Toberoff, Musk’s legal counsel, that the bid was not aligned with the best interests of the organization’s mission.

On Monday, Musk, alongside his AI company xAI and a consortium of investors, presented an offer to acquire OpenAI’s nonprofit for $97.4 billion. The proposal received a swift, though initially informal, dismissal from OpenAI CEO Sam Altman and the board.

Andy Nussbaum, representing the OpenAI board, explained in a statement that the bid failed to accurately value the nonprofit and reiterated that it was not for sale.

Ongoing Legal Dispute

Elon Musk, a co-founder of OpenAI, initiated a lawsuit against the company and Altman last year. The suit alleges anticompetitive behavior and fraudulent practices.

OpenAI’s Structural Evolution

OpenAI initially began as a nonprofit organization. It later transitioned to a “capped-profit” model in 2019. The nonprofit remains the sole controlling shareholder of the capped-profit OpenAI corporation, retaining fiduciary responsibility for upholding the nonprofit’s charter.

Currently, OpenAI is undergoing a restructuring process to become a traditional for-profit company, specifically a public benefit corporation. However, Musk’s lawsuit seeks to prevent this conversion.

Musk’s Conditional Withdrawal

In a court filing submitted on Wednesday, Musk’s legal team indicated that the billionaire would withdraw his acquisition bid if the OpenAI board committed to preserving the charity’s original mission and halting the transition to a for-profit structure.

OpenAI’s attorneys countered in a filing the same day, asserting that Musk’s attempt to gain control of the company was “an improper bid to undermine a competitor.” They also pointed out the contradiction between his court position – that restructuring would violate the charitable trust – and his attempt to take over.

Public Exchanges Between Allies

Throughout the week, supporters of Musk and Altman have engaged in public disagreements regarding the offer. Ari Emanuel, a backer of Musk’s bid, described Altman as “a phony” in a podcast interview on Thursday, accusing him of attempting to exploit the charity and its founding principles.

Altman, in response, characterized Musk’s bid as a tactic to impede OpenAI’s progress and suggested that Musk’s actions stem “from a position of insecurity.”

Key Points of the Conflict

• The Offer: Elon Musk offered $97.4 billion to acquire OpenAI’s nonprofit.
• The Rejection: OpenAI’s board unanimously rejected the offer.
• The Lawsuit: Musk is currently involved in a legal dispute with OpenAI.
• Restructuring: OpenAI is transitioning to a for-profit public benefit corporation.
• Competition: The board views Musk’s bid as an attempt to disrupt competition.