PARIS (AP) — Sam Altman, the CEO of OpenAI, has rejected a takeover bid worth $97.4 billion from Elon Musk, his former colleague and current competitor. This unexpected proposal could hinder Altman’s efforts to transition OpenAI, the creator of ChatGPT, into a profitable enterprise.

“We are not for sale,” Altman asserted during an AI summit in Paris on Tuesday.

Musk’s offer, revealed on Monday, adds another chapter to a long-standing rivalry between the two regarding control of the AI organization they co-founded a decade ago as a nonprofit. OpenAI has emerged as a prominent player in the rapid growth of generative AI technologies.

During an on-stage dialogue with France’s AI minister, Altman stated, “OpenAI is driven by a mission. We are a unique organization committed to ensuring that AGI benefits all of humanity, and we are dedicated to fulfilling that mission.”

Since its establishment in 2015, OpenAI has aimed to develop artificial general intelligence (AGI) safely—a technology that surpasses human intelligence. Musk was an early investor and board member before departing OpenAI in 2018 after a power struggle that led to Altman’s leadership.

What Lies Ahead?

Musk’s proposal complicates OpenAI’s plans to shift away from its nonprofit origins towards a profit-driven model. The organization’s board will need to carefully assess Musk’s offer; it is not solely Altman’s decision to accept or decline. Bret Taylor, the board chair, reinforced Altman’s stance at a Wall Street Journal event in Palo Alto, California, declaring, “OpenAI is not on the market.”

Taylor characterized Musk’s unsolicited bid as “largely a distraction” from the board’s duty to uphold the organization’s mission.

As a nonprofit entity, Taylor explained, “Our responsibility is straightforward: every strategic choice we make must be evaluated through the lens of whether it supports our mission to ensure AGI serves humanity positively. I genuinely struggle to understand how this offer aligns with that duty.”

The board will have to consider not only the value of the company’s assets but also the implications of relinquishing control over the development of groundbreaking AI technology. Musk’s proposition appears to establish a baseline for the nonprofit concerning what it should receive if it decides to relinquish control of its subsidiaries.

Rose Chan Loui, the executive director of the Lowell Milken Center on Philanthropy and Nonprofits at UCLA Law, advised that the board should scrutinize the legitimacy of Musk’s offer, including whether he and his investors are prepared to pay in cash. They must also assess whether a new board under Musk’s influence would maintain independence and what assurances they could provide about upholding OpenAI’s public mission.

Challenges Facing OpenAI’s Nonprofit Status

Musk’s $44 billion acquisition of Twitter in 2022 began similarly with an unsolicited bid and subsequent legal disputes with the platform’s board, which also included Taylor. However, acquiring OpenAI would be more complex due to its commitment to charitable aims.

“There exists a legally binding purpose,” remarked Jill Horwitz, a UCLA School of Law professor. “This obligation was established publicly when the nonprofit OpenAI was founded, and it is enforceable by law.”

The remarkable success of ChatGPT over the past two years has elevated OpenAI’s profile and opened up new business avenues, while also exacerbating internal conflicts regarding its direction and the advanced AI systems in development. In late 2023, the board removed Altman, only for him to return shortly after with a new board backing him.

Considering the Future

OpenAI’s nonprofit objectives, most recently outlined in 2020, are to ensure that artificial general intelligence benefits all of humanity through research and funding. The burning question remains: can it fulfill that objective if it sells its assets and forfeits control over the AI technology it is developing?

“To promise the world that you are bound by a legal purpose while simultaneously telling your investors not to expect returns is akin to a donation,” stated Horwitz. “To later shift gears and assert ownership once the organization gains significant traction feels like a breach of that promise.”

Musk has previously taken legal action against OpenAI alleging that it violated its foundational principles as a nonprofit dedicated to public benefit. His legal representation claims that Musk invested approximately $45 million into the startup from its inception until 2018.

Last week, attorneys for both parties convened in a California federal court, where the judge considered Musk’s request for an order to halt OpenAI’s transition to a for-profit model. While the judge has yet to issue a ruling, she remarked that Musk’s claim of potential irreparable harm appeared tenuous, though she acknowledged sufficient grounds to advance to a jury trial.

Supporters of Musk’s Proposal

Alongside Musk and xAI, several other entities are backing the bid announced on Monday, including Baron Capital Group, Valor Management, Atreides Management, Vy Fund, and firms associated with Musk allies Ari Emanuel and Jon Lonsdale.

Musk’s lawyer, Marc Toberoff, stated that if Altman and the current board maintain their intention to become a fully for-profit organization, it is crucial that the nonprofit receive fair compensation for losing control over what is arguably the most transformative technology of our era.

In his address to employees this week, Altman assured that OpenAI’s structure “prevents any single individual from seizing control.” He characterized Musk’s maneuvers as the actions of a competitor striving to gain ground. “I imagine he’s mostly looking to slow our progress. Clearly, he is a competitor,” Altman remarked in an interview with Bloomberg TV during the Paris summit.

Continuing their personal disputes, Altman expressed concern for Musk’s well-being, suggesting that Musk may struggle with his own happiness. “It seems likely that his life is rooted in insecurity. I genuinely feel for him,” Altman concluded.

—-

O’Brien reported from Providence, Rhode Island, and Beaty from Seattle.

—-

The Associated Press and OpenAI maintain a licensing and technology agreement granting OpenAI access to portions of AP’s text archives.