Elon Musk, alongside a group of investors, has made a staggering $97.4 billion offer to acquire OpenAI, the nonprofit organization behind ChatGPT. The move is the latest in Musk’s ongoing efforts to prevent OpenAI from shifting to a for-profit model.

The bid is expected to intensify tensions between Musk and OpenAI CEO Sam Altman, who have long been at odds over the future direction of the AI company. In a swift response on X, formerly Twitter, Altman dismissed the offer, quipping:

Musk co-founded OpenAI with Altman in 2015 as a nonprofit but parted ways before the company became a major player in AI. He later launched his own competing AI venture, xAI, in 2023.

Political and Financial Backdrop

As the CEO of Tesla and the owner of X, Musk is a close political ally of former President Donald Trump. He invested heavily in Trump’s reelection campaign and currently leads the Department of Government Efficiency, a White House initiative aimed at downsizing federal agencies.

Tensions between Musk and OpenAI escalated further after the company announced a $500 billion AI project backed by the Trump administration, a move Musk has publicly criticized.

The Legal Battle

Musk has been vocal about his opposition to OpenAI’s transition from a nonprofit to a for-profit model, arguing that such a move prioritizes financial gain over public benefit. In August last year, he sued Altman and OpenAI’s leadership, alleging that they violated the company’s original mission. In November, he sought a court order to block the organization’s restructuring plans.

“It’s time for OpenAI to return to the open-source, safety-focused force for good it once was,” Musk stated on Monday. “We will make sure that happens.”

Despite Musk’s legal challenges and the latest acquisition bid, OpenAI remains firm in its stance. According to reports from The Information, Altman has reassured employees that the board has no interest in engaging with Musk’s proposal.

Major Investors and Financial Challenges

Musk’s consortium includes his AI startup xAI, Baron Capital Group, Emanuel Capital, and other investors. If the acquisition moves forward, xAI may merge with OpenAI, according to Reuters.

However, the deal faces significant financial and regulatory hurdles. OpenAI was recently valued at $157 billion, and talks are underway for a new funding round, led by SoftBank, that could push its valuation to $300 billion. Experts suggest that Musk and his backers would need to secure substantial capital to make their offer viable.

Jonathan Macey, a corporate governance professor at Yale Law School, noted that OpenAI’s nonprofit structure complicates matters. “If OpenAI turns down a higher bid to sell at a lower price, it raises concerns about whether the nonprofit’s mission is being properly upheld,” he said.

Musk, whose Tesla shares are valued at approximately $165 billion, might need to offload part of his stake, leverage his SpaceX holdings, or secure loans to finance the acquisition. An investment banker familiar with the matter, speaking anonymously, suggested that Musk’s $44 billion purchase of Twitter could limit his borrowing options.

Analysts believe Musk’s bid could disrupt OpenAI’s current fundraising efforts and delay its transition to a for-profit model. “With credible investors backing this offer, OpenAI’s board cannot afford to ignore it,” said Gil Luria, an analyst at D.A. Davidson. “They have a fiduciary duty to consider whether this is a better deal than SoftBank’s offer.”

As the AI industry continues to evolve at a rapid pace, the battle over OpenAI’s future is far from over. Whether Musk succeeds in his takeover attempt or not, his intervention is certain to shape the company’s trajectory in the months ahead.