It’s Musk vs. Altman in the Battle for Generative AI’s Soul

Elon Musk fired a new salvo in the AI arms race this week with his unsolicited bid for OpenAI Inc., the not-for-profit that controls OpenAI and its flagship LLM, ChatGPT. Claiming a desire to return the organization he co-founded “to the open-source, safety-focused force for good it once was,” Musk put up $97.4 billion for all of OpenAI Inc’s assets, which include the for-profit subsidiary OpenAI Global, LLC.

OpenAI CEO Sam Altman rejected the offer out of hand, countering that he’d be happy to buy ‘Twitter’ (X) from Musk for $9.74 billion.

no thank you but we will buy twitter for $9.74 billion if you want

— Sam Altman (@sama) February 10, 2025

Just the latest posturing in a long-running feud between two tech giants, or is there more at stake?

Given the controversies that continue to swirl around generative AI (kills jobs, steals content, supercharges cybercrime…) the idea that a key player like OpenAI could return to its charitable roots has its attractions. On the other hand, how seriously should we take altruistic claims by one of the world’s richest men?

We consider what Musk’s power move could spell for OpenAI’s fortunes and what it portends for the wider AI industry if he succeeds.

Table of Contents Table of Contents

1. Key Takeaways
2. Billionaire Handbags at Dawn
3. What Is Musk's Game?
4. Chance for Open Source AI
5. Uncertainty for Corporate Customers & Key Partners
6. Is Altman's Rejection Final?
7. The Bottom Line
8. FAQs
9. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. Billionaire Handbags at Dawn
3. What Is Musk's Game?
Show Full Guide
4. Chance for Open Source AI
5. Uncertainty for Corporate Customers & Key Partners
6. Is Altman's Rejection Final?
7. The Bottom Line
8. FAQs
9. References

Billionaire Handbags at Dawn

Musk and Altman have history. The pair co-founded OpenAI in 2015 backed by a glittering roster of tech luminaries including Reid Hoffman, Peter Thiel, Amazon Web Services (AWS), Infosys, and storied startup accelerator Y Combinator.

Then, in 2019, the relationship soured as the two co-chairs fell out over OpenAI’s management structure. Musk put himself forward for a majority stake and board control, but Altman and others demurred. The Tesla and SpaceX chief departed soon after.

Since then, he’s been trying to find a way back, taking OpenAI and Altman to court and making numerous statements expressing concern about the potential risks of a sentient artificial general intelligence (AGI) – OpenAI’s purported long-term objective.

He’s also accused company leadership of moving the organization away from its foundational mission of using AI to benefit humanity.

Is he serious?

What Is Musk’s Game?

Some say Musk is cosplaying as an open-source advocate and the bid is a chess move to bog OpenAI down in distractions, giving his own xAI a chance to catch up. Altman said as much in an interview with Bloomberg, suggesting Musk should “compete by building a better product.”

“I wish he would just compete by building a better product,” Sam Altman says of @elonmusk in an interview with @TomMackenzieTV.

“Probably his whole life is from a position of insecurity, I feel for the guy… I don't think he's, like, a happy person.” pic.twitter.com/YhUmmW5iNe

— annmarie hordern (@annmarie) February 11, 2025

While ‘no’ probably does mean no, the unsolicited offer could complicate Altman’s goal of turning the ChatGPT maker into a for-profit firm.

Jim Lundy, Founder and CEO of Aragon Research, writes that the tussle “highlights the tension between open-source ideals, commercial interests, and the growing influence of large tech companies in the AI domain. The involvement of high-profile investors and the ongoing legal battles underscore the high stakes involved.”

Has Musk played a blinder? Win or lose, he might make OpenAI’s non- to for-profit transition prohibitively expensive.

In the structural maneuver OpenAI’s board is attempting, US law requires that it pay ‘fair value’ for the non-profit’s assets – which include ChatGPT. That could raise the funding bar for Altman as he negotiates with investors.

But the corporate intrigues and peculiarities of US non-profit governance have been well covered elsewhere. Let’s consider what the bid to buy OpenAI could mean for the AI market as a whole.

Chance for Open Source AI

Some experts believe OpenAI is at risk of losing its lead to China’s DeepSeek and other open source challengers rapidly gaining traction in the market.

Moving to a similar model would benefit corporate customers by giving them the flexibility to build bespoke applications on top of OpenAI technology without expensive licensing. DIY coders and professional developers could also gain more freedom to tinker and experiment.

While the company would need to re-think how it makes money, such a change could arguably strengthen OpenAI’s market position against other open source challengers.

There’s little question that an open ‘AI for humanity’ was the firm’s original objective – it’s literally in the name. Market and competitive pressures could make a return to that positioning profitable.

Sam Altman emails Elon Musk

May 25, 2015 pic.twitter.com/L1F5bMkqkd

— Internal Tech Emails (@TechEmails) November 15, 2024

Uncertainty for Corporate Customers & Key Partners

On the downside, Musk’s takeover attempt raises questions about OpenAI’s future at a sensitive time, as it fends off serious competition from a sudden new rival and tries to forge a new corporate direction.

While the offer has apparently been rejected, Musk isn’t likely to give up. Any extended power struggle could spook OpenAI’s customers – and key technology partners like Microsoft that have woven OpenAI’s LLM into their cloud platforms.

But there could be a silver lining. Aragon’s Lundy believes enterprise customers should pay close attention to conflict as its outcome could bring more AI investors to the table. He says:

“While there are differences of opinion between Musk and Altman, the result of this buyout offer should be even more investment in AI hardware and software development.”

Is Altman’s Rejection Final?

Even as CEO, Altman isn’t empowered to accept or reject Musk’s offer on his own. OpenAI’s nonprofit board is bound by law to consider its merits, gauging both the value of the company’s assets and the value of being in charge of developing its technology.

On Tuesday, he told OpenAI staff in a Slack chat that the board has no intention of accepting Musk’s ’embarrassing’ offer.

A day later Musk upped the ante, saying he’d withdraw the bid if OpenAI ceases the process to become a for-profit company.

Scam Altman
pic.twitter.com/j9EXIqBZ8u

— Elon Musk (@elonmusk) February 10, 2025

The Bottom Line

It’s hard not to feel some sympathy for Altman. Betting against Musk is always a bad trade, and his latest move brings with it a looming sense of deja vu.

Back in 2022, Musk’s $44 billion takeover of Twitter also kicked off with an unsolicited takeover bid and a legal tussle with its board. Seated at the social network’s top table during that eventually losing battle was Bret Taylor, OpenAI’s current chair.

FAQs