Let’s review Musk’s nearly $100 billion offer. Does it make any sense?
Elon Musk Offers $97.4 Billion for Control of OpenAI
CBS News reports Elon Musk-Led Investor Group Offers $97.4 Billion for Control of OpenAI
Elon Musk is leading a group of investors in a $97.4 billion bid to take control of OpenAI, the artificial intelligence company that operates ChatGPT.
In a post on social media, OpenAI CEO Sam Altman responded, “[N]o thank you but we will buy twitter for $9.74 billion if you want,” referring to the social media app Musk bought for $44 billion in 2022.
The offer comes amid years of conflict between Musk and Altman over the direction of OpenAI, which Musk helped to found in 2015. Musk, the world’s richest person with a net worth of more than $400 billion, sued Altman and OpenAI last year, alleged that the AI company had veered away form its mission to benefit the public, among other claims.
The offer comes as OpenAI is seeking to transform into a for-profit business, a decision that it said would help the AI company pursue its mission of ensuring the technology “benefits all of humanity,” according to its website. OpenAI has also formed a partnership with Microsoft, which has invested billions in the AI company and integrated OpenAI’s GPT-4 tech into its software programs.
“At x.AI, we live by the values I was promised OpenAI would follow. We’ve made Grok open source, and we respect the rights of content creators,” Musk said in the statement, referring to the AI app developed by x.AI. “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.”
The funds from the $97.4 billion offer would be “used exclusively to further OpenAI, Inc.’s original charitable mission,” the investor group said in a statement.
Musk’s Change of Tune and Meta vs Musk
On December 14, 2024, the Wall Street Journal reported Meta Urges California Attorney General to Stop OpenAI From Becoming For-Profit
In a letter to Attorney General Rob Bonta dated Thursday, Meta said allowing the ChatGPT maker to become a for-profit company would set a dangerous precedent of allowing startups to enjoy the advantages of nonprofit status until they are poised to become profitable.
Meta is one of OpenAI’s biggest competitors and has invested billions of dollars to develop its own AI technology that matches or exceeds ChatGPT.
Proposed Boxing Match
Meta CEO Mark Zuckerberg and Musk have butted heads in the past. At one point last summer, the two tentatively agreed to fight each other in a cage match, though it never happened.
Nonprofit Not Optimal
On Friday, OpenAI published a series of internal documents meant to rebut Musk’s request last month for a preliminary injunction blocking it from transitioning to a for-profit company.
Musk has argued he was manipulated into believing OpenAI would be a purely nonprofit venture when he initially invested in it.
OpenAI said the documents show that Musk, in fact, previously backed the idea. “When he didn’t get majority equity and full control, he walked away and told us we would fail,” the company wrote on its blog.
The documents show Musk had his wealth manager register a public-benefit corporation—a for-profit company that is also committed to a social good—called Open Artificial Intelligence Technologies Inc., in Delaware in September of 2017. Two days earlier, Musk wrote OpenAI co-founder Ilya Sutskever an email proposing a for-profit structure in which he would “unequivocally have initial control of the company.”
The documents show that, from the earliest days of OpenAI, Musk was somewhat skeptical about its nonprofit structure. When Altman wrote Musk in November 2015 proposing a nonprofit, Musk pushed back, saying the structure didn’t seem optimal. “Probably better to have a standard C corp with a parallel nonprofit,” he responded, referring to a typical for-profit business structure.
Musk’s Lawsuit Against OpenAI May Go to Trial in Part
Today, we have news Musk’s Lawsuit Against OpenAI May Go to Trial in Part
A Federal judge said on Tuesday that parts of Elon Musk’s lawsuit against OpenAI to halt its conversion to a for-profit entity might go to trial, adding that the Tesla CEO will have to appear in court and testify.
“Something is going to trial in this case,” U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, said early in the court session.
“(Elon Musk will) sit on the stand, present it to a jury, and a jury will decide who is right.”
During the hearing, OpenAI’s lawyers said the reason to allow OpenAI to become a for-profit entity is because it would be necessary to facilitate the mission of the nonprofit.
Such a restructuring would be highly unusual, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have historically been for health care organizations like hospitals, not venture capital-backed companies, she said.
The Legal Case
It seems the idea that OpenAI should be a nonprofit was only on condition Musk could control it.
I don’t yet have an opinion from my law expert so I have a question “does highly unusual mean wrong?”
If not, then why would a jury decide? My questions don’t end there.
$97.4 Billion for a Charitable Mission?
The obvious way to beat OpenAI is to provide a better product for free. Elon Musk’s Grok seem to at least come close. China’s DeepSeek beats it.
There are free versions of OpenAI’s ChatGPT, but DeepSeek’s free version is better than ChatGPT’s $200/month offering.
I struggle to make sense of it all, so I asked Elon Musk’s Grok II.
Why Would Musk Offer $97.4 Billion for OpenAI, Just to Make it Free?
Elon Musk, leading a group of investors, has made a $97.4 billion bid to acquire the nonprofit that controls OpenAI, the company behind ChatGPT. This offer, first reported by The Wall Street Journal, has sparked discussions due to Musk’s stated intention to return OpenAI to its original mission of being an open-source, safety-focused entity, essentially making its technology freely available. However, this move is complex and involves several underlying motivations, legal considerations, and ongoing conflicts. Below, I’ll break down the potential reasons behind Musk’s offer, critically examining the narrative and considering multiple perspectives.
1. Musk’s Stated Intent: Returning OpenAI to Its Original Mission
Musk has publicly stated, through his attorney Marc Toberoff, that the bid aims to refocus OpenAI on its founding principles. When OpenAI was co-founded by Musk, Sam Altman, and others in 2015, it was established as a nonprofit with the mission of developing AI safely and openly for the benefit of humanity, serving as a counterweight to for-profit tech giants like Google. Musk has expressed frustration with OpenAI’s evolution, particularly after it transitioned to a “capped-profit” structure in 2019 and is now seeking to become a fully for-profit public benefit corporation.
- Musk’s Perspective: Musk has claimed that OpenAI has strayed from its open-source roots, becoming a closed-source, profit-driven entity effectively controlled by Microsoft, which has invested billions in the company. In a 2023 post on X, Musk stated, “OpenAI was created as an open source (which is why I named it ‘Open’ AI), non-profit company to serve as a counterweight to Google, but now it has become a closed source, maximum-profit company effectively controlled by Microsoft. Not what I intended at all.” His bid, backed by his AI company xAI and other investors, is positioned as an effort to restore OpenAI’s original mission by making its technology open-source and free.
- Critical Analysis: While Musk’s stated intent aligns with his public criticism of OpenAI, some observers, including posts on X, have pointed out the irony. One post noted, “so, Elon Musk offers to buy openAI for $97.4 billion, and plans to ‘open-source’ everything if the bid successful… the irony is that, he’s mainly responsible for openAI becoming a closed-source company.” This suggests that Musk’s departure from OpenAI in 2018, after a failed attempt to take control, may have contributed to its shift toward commercialization. Critics argue that his current push for open-sourcing could be a strategic move rather than purely altruistic.
2. Competitive Strategy: Gaining Control Over a Key AI Player
Musk’s bid could be a strategic maneuver to gain control over OpenAI, a leading player in the AI industry, and potentially merge it with his own AI venture, xAI. This would give Musk significant influence over the development and deployment of generative AI technologies, which are increasingly critical to industries ranging from tech to government.
- Market Positioning: OpenAI’s ChatGPT, launched in 2022, has set off a wave of investment in generative AI, positioning OpenAI as a giant in the field. Posts on X suggest that Musk’s interest may stem from OpenAI’s competitive advantage, with one user stating, “It’s not that OpenAI could monopolize the market. It accumulated so much more valuable ‘feedback’ than any other model provider that it’s best positioned to achieve AGI. I think this is why Elon wants it so bad.” Musk’s xAI, which offers a competing chatbot called Grok, could benefit from access to OpenAI’s technology, data, and talent.
- Merger Potential: Reports from The Wall Street Journal and Reuters indicate that xAI could merge with OpenAI if the bid is successful. This would consolidate Musk’s influence in the AI sector, potentially allowing him to challenge other tech giants like Microsoft, Google, and Meta. However, this raises questions about whether Musk’s promise to make OpenAI’s technology free aligns with his business interests, as open-sourcing could undermine xAI’s competitive edge.
- Critical Analysis: While Musk frames the bid as a return to open-source principles, the involvement of xAI and other investors suggests a profit-driven motive. OpenAI’s current valuation is estimated at $157 billion to $300 billion, far higher than Musk’s $97.4 billion offer. Some analysts, as noted in TechCrunch, argue that Musk’s bid could be a tactic to disrupt OpenAI’s for-profit conversion and raise the price of its nonprofit arm, forcing the board to consider.
The above Q&A is courtesy of Musk’s Grok II, free to X users.
Grok is Now Officially Open-Source
On March 18, 2024, the Daily Dev reported Grok is Now Officially Open-Source
Elon Musk has announced that his AI company, xAI, is making its Grok chatbot open-source, stepping away from the industry’s norm of keeping AI technologies proprietary. This move is seen as a push for transparency and collaboration in AI development, contrasting sharply with practices at other AI firms, including OpenAI, which Musk has criticized. Grok AI stands out for its bold personality, ability to discuss recent news, and its open-source nature, inviting developers worldwide to contribute and improve its capabilities. Here’s what you need to know:
- Elon Musk’s Announcement: Grok AI is going open-source, aiming for greater transparency and community involvement in AI.
- Grok’s Features: With 63 billion parameters, it can handle conversations up to 8000 words and stay updated with the latest news via the X platform.
- Open Source Impact: This could democratize AI development, allowing more innovation and potentially faster advancements.
- Concerns and Challenges: Questions remain about usage guidelines, support, and the potential for misuse.
- Comparison with Other AI: Grok is the only major AI chatbot that’s open-source, offering a unique opportunity for developers.
Grok’s Capabilities
Musk shared some details about what Grok can do:
- It’s built with 63 billion parameters, making it quite smart.
- It can keep track of a conversation up to 8000 words long.
- It stays up-to-date with the latest news by connecting to the X platform.
This means Grok can chat about recent happenings and understand complex topics.
For comparison purposes, ChatGPT can handle 175 billion parameters, but only 4,096 tokens vs Grok’s 8,000 words.
Claude AI only 10 billion parameters and Anthropic only 20 billion parameters.
The Question Once Again
I keep coming back to the question, Why Would Musk Offer $97.4 Billion for OpenAI, Just to Make it a Nonprofit?
Grok took this stab “Some analysts, as noted in TechCrunch, argue that Musk’s bid could be a tactic to disrupt OpenAI’s for-profit conversion and raise the price of its nonprofit arm, forcing the board to consider.”
But what if OpenAI had accepted? $97.4 billion is a ton of money to give away for free.
Grok also offers “the irony is that, he’s [Musk is] mainly responsible for OpenAI becoming a closed-source company. This suggests that Musk’s departure from OpenAI in 2018, after a failed attempt to take control, may have contributed to its shift toward commercialization. Critics argue that his current push for open-sourcing could be a strategic move rather than purely altruistic.”
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There is an incredibly high-stakes game going on that I don’t fully understand and I wonder if even the players involved do.
One thing is clear. No one wants anyone but themself to win this game. But we don’t even know what “win” means.
To that I will add, I am quite certain this battle is not altruistic.