Elon Musk Offers $97.4B for OpenAI, Sam Altman Says 'No Thank You'

TMTPOST -- OpenAI CEO Sam Altman turned down an unsolicited $97.4 billion offer from a group of investors led by Elon Musk to acquire the nonprofit. The proposed OpenAI valuation was a significant drop, with SoftBank planning a $40 billion investment at a $260 billion valuation.

In a response on social platform X, Altman replied “No thank you” and offered to buy Twitter for $9.74 billion, referencing Musk's 2022 purchase of the platform for $44 billion. Musk, not amused, quickly labeled Altman a “swindler.”

Musk and Altman co-founded OpenAI in 2015, but Musk distanced himself from the venture over strategic disagreements. Altman, now working closely with Microsoft, aims to turn OpenAI into a for-profit organization—a shift Musk is contesting in court due to his original $45 million donation, which he claims was tied to the nonprofit status.

Legal experts are weighing in on the validity of the offer and the complexities surrounding OpenAI's business structure and pending litigation. Musk, who also runs AI company xAI, has publicly criticized OpenAI's recent collaborations and financial moves, further intensifying the public feud between the two tech moguls.

Altman told staff in a message that the company's board of directors intends to make clear it has no interest in Elon Musk's "supposed bid", the Information reported on Monday.

Musk's bid is supported by his AI startup, xAI, which could merge with OpenAI if the deal goes through. The proposal also has backing from investors including Valor Equity Partners, Baron Capital, Atreides Management, Vy Capital, Joe Lonsdale’s 8VC, and Ari Emanuel’s investment fund. However, Lonsdale declined to comment, and other investors have yet to respond to requests for comment.

The seriousness of Musk’s bid is unclear, and it’s uncertain what his exact motivations are, said Rob Rosenberg, the founder of Telluride Legal Strategies. Even if unsuccessful, Rosenberg suggested that Musk's move could complicate OpenAI’s ongoing transition from a nonprofit to a for-profit entity—a shift Musk has openly opposed.

“I think he’s trying to make a statement and bring more attention to the fact that OpenAI is still on this course to switch from being a non-profit to a for-profit company,” Rosenberg added.

In the statement, Marc Toberoff, a lawyer representing the investors, pointed out that one motivation for the bid is to exert external pressure on OpenAI as it works to determine a value for its business during the transition. “That value cannot be determined by insiders negotiating on both sides of the same table,” Toberoff wrote, emphasizing the need for transparency to serve the public interest.

Musk and Altman’s long-standing feud over OpenAI’s direction dates back to the company’s founding. Musk has criticized OpenAI for abandoning its original mission of acting as a charity focused on humanity’s benefit, while OpenAI has refuted these claims, suggesting Musk’s frustration stems from a failed attempt to integrate OpenAI into his car company, Tesla.

Since its inception, OpenAI has secured billions in investments from companies like Microsoft. Musk’s revised lawsuit accuses OpenAI of becoming monopolistic due to its partnership with Microsoft, which Musk argues is designed to stifle competition, including his own xAI. Musk’s lawsuit includes 26 claims, compared to 15 in the original version filed in August.

Meanwhile, Microsoft’s $13 billion investment in OpenAI has raised concerns from the U.S. Federal Trade Commission about the potential for Microsoft to dominate both cloud computing and AI markets. SoftBank Group is also in talks to invest up to $25 billion in OpenAI, which could make it the startup’s largest backer. OpenAI is reportedly aiming for a $300 billion valuation.

Recently, Microsoft and OpenAI renegotiated their partnership, allowing OpenAI to use cloud services from competitors, provided Microsoft doesn’t pursue the business itself. This restructuring coincided with a new $500 billion joint venture between OpenAI, SoftBank, and Oracle to build cloud computing data centers in the U.S., called Stargate.

As early as January 7 2025, Musk had initiated a series of legal actions, accusing OpenAI of betraying its original non-profit mission by establishing a for-profit division and colluding with its largest investor, Microsoft, to dominate AI development.

Lawyers sent letters to the attorneys general of California, where OpenAI is headquartered, and Delaware, where it is registered, demanding they publicly bid for the company to determine the fair market value of its charitable assets. Musk and other critics argue that they believe OpenAI may have undervalued itself when it spun off from the non-profit organization.

Around the same time, Musk suggested raising at least $100 million to counterbalance the giants. He hoped that by developing AGI (Artificial General Intelligence) through OpenAI's open-source approach, the technology would benefit all of humanity rather than being monopolized by a few big tech companies. Musk fully supported OpenAI, and the early OpenAI team received not only an annual salary of about $300,000 per person alongside equities in SpaceX.

However, by 2018, OpenAI's development was not meeting expectations due to financial constraints, such as being unable to afford expensive chips. Altman approached Microsoft, and after negotiations, Microsoft invested a total of $50 million. Musk expressed dissatisfaction with this, calling it a "disgusting" deal, marking OpenAI's shift towards a closed-source commercial path.

At that time, Musk harshly criticized OpenAI's leadership, citing mismanagement of funds and direction. He even proposed merging OpenAI into Tesla with himself as CEO, but this was rejected by Altman and other founders. OpenAI showed signs of transitioning into a limited-profit entity (OpenAI LP), which Musk strongly opposed, believing that OpenAI was deviating from its original mission and becoming a subsidiary of the interests of large companies like Microsoft.

Subsequently, Musk was ousted from the board, though he still promised to provide financial support. However, the rift between the two parties was difficult to mend.

In March 2019, OpenAI officially announced its transition from a "non-profit" to a "capped for-profit" model, with a profit cap set at 100 times any investment.

That same year, Microsoft invested $1 billion in OpenAI, gaining commercial licensing rights to OpenAI's technology, which began appearing in Microsoft's products and services. Musk's attitude shifted from supporting OpenAI to completely opposing its development path, leading to a formal split between the two parties.

By the end of 2022, the ChatGPT craze swept across the globe, sparking a wave of AI entrepreneurship worldwide. Microsoft invested $13 billion, ultimately helping OpenAI further solidify its position as an industry leader.

According to public data, as of October 2024, ChatGPT's monthly visits exceeded 3.1 billion. In July of the same year, Musk established his own large model company, xAI, and his relationship with OpenAI became increasingly strained.

Starting in 2024, Musk accused OpenAI of deviating from their original promises and demanding compensation for losses. The lawsuit mentioned that between 2016 and 2020, Musk donated over $44 million to OpenAI, paid the rent for OpenAI's office in San Francisco through Musk Industries, and invested significant time and effort in helping OpenAI recruit top talent. Additionally, OpenAI publicly released 50 emails with Musk to counter his claims.

OpenAI argued that Musk's legal claims were unfounded and excessive, saying that the nonprofit organization would receive the full value of its ownership in the for-profit entity.

Documents released by the company in December showed that Musk had previously supported transforming OpenAI into a for-profit organization but abandoned the idea due to his inability to control it.