Elon Musk Says He Will Drop OpenAI Bid if Company Keeps Corporate Structure

Elon Musk said in a court filing late Wednesday that he would withdraw his $97.4 billion bid to control OpenAI if the company dropped a longstanding effort to change its corporate structure.

Mr. Musk and a consortium of investors had offered on Monday to buy the assets of the nonprofit that controls OpenAI, escalating a yearslong feud between Mr. Musk and OpenAI’s chief executive, Sam Altman, over the future of artificial intelligence. Mr. Altman is in the middle of changing OpenAI’s corporate structure by shifting control of the company from the nonprofit to OpenAI’s investors, including Microsoft.

Two days later, OpenAI’s board of directors questioned the bid’s rationale and accused Mr. Musk of hypocrisy. Within hours, Mr. Musk’s legal team replied with the new court filing saying they would drop the bid if OpenAI’s board of directors agreed to preserve the mission of the nonprofit and “take the ‘for sale’ sign off its assets.”

The feud between Mr. Musk and Mr. Altman is deeply personal. Mr. Musk helped found OpenAI as a nonprofit in 2015, along with Mr. Altman and others. When Mr. Musk left the organization in 2018 after a battle for control, Mr. Altman attached OpenAI to a for-profit company so he could raise the large amounts of money needed to build A.I. technologies.

The nonprofit retained control of the company. Last year, Mr. Altman and his colleagues began working on a plan to shift control of the company from the nonprofit to OpenAI’s investors. Mr. Musk’s bid could complicate that plan.

To separate OpenAI from the nonprofit board, Mr. Altman and his colleagues must provide compensation. OpenAI might pay the nonprofit a fee, for instance, or give it a minority stake in the company.

But the nonprofit’s assets have not been given a value. Mr. Musk is trying to set one with his bid, which could mean that OpenAI’s for-profit arm would have to spend more to gain independence from the nonprofit.

OpenAI is unlikely to drop its plan to separate from the nonprofit. Under the terms of its last investment round, it must shift control of the company away from the nonprofit in less than two years. Otherwise, its funding will convert into debt, according to documents reviewed by The New York Times.

Mr. Musk is also suing OpenAI to try to block its plans to restructure.

OpenAI is currently working to complete a $40 billion fund-raising deal that would nearly double its valuation from just four months ago to around $300 billion.

(The Times has sued OpenAI and Microsoft, claiming copyright infringement of news content related to A.I. systems. The two companies have denied the suit’s claims.)