Elon Musk’s $97 billion flustered OpenAI – now it’s introducing rules to ward off future interest

OpenAI is considering restructuring the board of its non-profit arm to ward off unwanted bids, according to reports from the Financial Times.

The reported move follows a takeover attempt by Elon Musk, who last week offered $97.4 billion to buy the company alongside a consortium of investors.

OpenAI CEO Sam Altman initially said no to the bid via a post on X, and that refusal was later confirmed by the board. The AI developer was last year valued at $157 billion and more recent funding rounds suggest a value of $260 billion to $300 billion.

In the wake of the approach, OpenAI may give special voting rights to the board of its non-profit arm to beef up control over the for-profit side of the company. This, the reports noted, will enable the firm to push back against unwanted bids and also ensure existing investors can't take the reins.

Notably, the special voting rights would address one of Musk's apparent concerns, that the non-profit mission is being set aside in favour of commercial success. By giving more power to the non-profit division over the for-profit arm, the balance can be redressed.

The restructuring to a public benefit corporation has been controversial — at least for co-founder Musk, who departed in 2018 and has since founded his own AI company, xAI.

But OpenAI's leadership believes the new structure will lead to more investment - a necessary decision given the high costs of developing and running these systems.

Under the restructuring, the for-profit division would pay out an estimated $30 billion to the non-profit for the technology assets. Though Musk's offer undervalues the wider company, the suggestion is that his $97.4 bid is designed to suggest that OpenAI should pay the charitable arm much more.

Musk's lawyer, Marc Toberoff, told the Financial Times that OpenAI was "putting the charity's assets up for sale."

OpenAI’s big restructuring battle

On February 10, Musk and a group of investors offered $97.4 billion to buy OpenAI, sparking a war of words between the Tesla founder and Altman after the latter's refusal.

Toberoff, who is managing the bid on behalf of Musk and the investors, said at the time the motivation was ensuring the charity was "fairly compensated for what its leadership is taking away from it: control over the most transformative technology of our time."

"It's time for OpenAI to return to the open-source, safety-focused force for good it once was. We will make sure that happens,” Musk later said in a statement.

Following the board's refusal, a filing from Musk and the investors said the bid would be withdrawn if the plans to restructure were dropped.

“Otherwise, the charity must be compensated by what an arms-length buyer will pay for its assets," the filing said.

Musk has previously sued OpenAI on related grounds, and has asked a federal judge to block the conversion to the public benefit corporation on grounds including breach of contract; a ruling has not yet been made.

OpenAI hasn't addressed Musk's various concerns directly, instead suggesting that the real motivation behind his bid and suits is jealousy of the success of an AI firm he once co-founded. When the OpenAI board rejected the bid, they called it his "latest attempt to disrupt the competition."

In an interview with Bloomberg, Altman urged Musk to "just compete by building a better product".

"I think there’s been a lot of tactics," he added.

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