Elon Musk has made a bold all-cash bid to acquire OpenAI, offering $97.4 billion, an offer that OpenAI’s leadership has firmly rejected. The offer, made on February 10, comes amid an ongoing legal battle between Musk and OpenAI over the company’s restructuring and alleged ties to Microsoft Corp., a move Musk claims violates antitrust laws.
Musk’s Offer and OpenAI’s Response
Musk’s bid, backed by a group of high-profile investors, aimed to take full control of OpenAI, the company behind the widely popular ChatGPT. However, OpenAI’s CEO Sam Altman has dismissed the bid outright, stating that the company is “not for sale.” Altman suggested that Musk’s offer is nothing more than an attempt to hinder OpenAI’s progress, as Musk simultaneously builds his own AI venture, xAI.
In a legal filing submitted on Wednesday in federal court in Oakland, California, OpenAI’s lawyers argued that Musk’s unsolicited bid undermines his own claims in court. The court documents claim Musk’s lawsuit against OpenAI and his attempt to block the company’s transition to a for-profit entity contradict his actions outside of court.
“Out of court, those constraints evidently do not apply, so long as Musk and his allies are the buyers,” OpenAI’s legal team stated in their filing. “Musk would have OpenAI, Inc. transfer all of its assets to him, for his economic benefit and that of his competing AI business and hand-picked private investors.”
Legal Implications and Ongoing Court Battle
The lawsuit, titled Musk v. Altman, was filed in the US District Court for the Northern District of California. It centers on Musk’s argument that OpenAI’s restructuring, which involved forming a for-profit subsidiary, contradicts the startup’s original nonprofit mission. Musk contends that OpenAI’s transition enables it to shift assets for private gain, a move he claims is illegal.
However, OpenAI’s legal team argues that Musk’s recent buyout attempt debunks his courtroom assertions. If Musk were to acquire OpenAI, they claim, it would result in an immediate asset transfer that benefits him and his investment coalition. OpenAI’s lawyers accuse Musk of hypocrisy, noting that while he argues in court against the transfer of assets for private gain, he is simultaneously attempting to acquire those same assets himself.
During a hearing on February 4, US District Judge Yvonne Gonzalez Rogers expressed skepticism about Musk’s demand for immediate action against OpenAI. While she has not yet issued a ruling, she indicated that Musk may take the company to trial on at least some of his claims. According to legal representatives, the earliest potential trial date would be in late 2026.
Musk’s AI Strategy and Industry Ramifications
Elon Musk has long been a vocal critic of OpenAI’s direction. Once a co-founder of the organization, he distanced himself from OpenAI in 2018 after disagreements over the company’s trajectory. Since then, Musk has frequently criticized OpenAI, particularly its close ties with Microsoft, which has invested billions into the company and provides the cloud infrastructure for its AI models.
Musk’s rival AI venture, xAI, aims to develop artificial intelligence that, in his words, prioritizes transparency and aligns with human values. His effort to acquire OpenAI is seen by many as an aggressive move to consolidate AI leadership under his control. However, industry analysts question whether Musk’s strategy is a genuine attempt to advance AI or a competitive maneuver against OpenAI.
Altman, who was briefly ousted from OpenAI’s leadership in 2023 before being reinstated, has stated that OpenAI remains focused on its mission to develop safe and beneficial AI. He dismissed Musk’s bid as a hostile takeover attempt rather than a sincere effort to contribute to the company’s vision.
Potential Regulatory Challenges
If Musk’s bid were to gain traction, it would likely face intense scrutiny from regulators. Given the increasing regulatory focus on artificial intelligence and antitrust concerns, a Musk-led OpenAI could trigger investigations by U.S. and international agencies. The Federal Trade Commission (FTC) and the Department of Justice (DOJ) have both signaled greater interest in ensuring competition in the AI sector remains fair and transparent.
Furthermore, OpenAI’s ties to Microsoft add another layer of complexity. While Microsoft has not been directly involved in the legal dispute, its multibillion-dollar investment in OpenAI means any change in ownership could significantly impact its AI strategy. Microsoft has exclusive licensing rights to OpenAI’s models, and a shift in leadership under Musk could disrupt those agreements.
Market and Industry Reactions
Musk’s buyout attempt has sent shockwaves through the AI sector. Investors, competitors, and policymakers are closely watching how the situation unfolds. Some analysts believe Musk’s aggressive move indicates the rising value of AI startups, with OpenAI’s estimated $97.4 billion valuation highlighting how critical AI technology has become in the global economy.
The news has also fueled discussions on AI governance. As AI companies wield increasing influence over digital infrastructure, there is growing debate over who should control such powerful technology. Should AI development remain within nonprofit or mission-driven organizations, or should private entities like Musk’s xAI take the lead?
What Happens Next?
For now, OpenAI remains firm in its rejection of Musk’s bid. The legal battle will continue, with Judge Gonzalez Rogers expected to rule on whether Musk’s case can proceed to trial. If the case does go to trial, Musk may be required to testify, providing further insights into his motivations and AI ambitions.
Meanwhile, OpenAI continues to forge ahead with its own plans. Altman has reaffirmed his commitment to the company’s long-term vision, emphasizing that OpenAI will continue its mission to ensure AI benefits humanity.
Musk’s buyout bid may be unsuccessful, but it has reignited discussions about AI ownership, ethics, and competition. Whether this marks the beginning of an AI corporate power struggle or simply another chapter in Musk’s long-running feud with OpenAI remains to be seen.
Conclusion
Elon Musk’s all-cash offer for OpenAI has added another layer of complexity to an already heated legal dispute. His bid, which OpenAI has rejected, directly contradicts his claims in court that the company’s assets should not be transferred for private gain. The case has significant implications not just for OpenAI and Musk but for the broader AI industry, regulatory landscape, and the future of AI governance.
As the situation unfolds, the legal battle between Musk and OpenAI will continue to shape the discourse on artificial intelligence, corporate competition, and ethical considerations in AI development. With both sides deeply entrenched in their positions, the final outcome could have lasting consequences for the future of AI technology and its global impact.