• Economy
  • Editor’s Pick
Money Rise Today – Investing and Stock News
  • Investing
  • Stock
Investing

Elon Musk’s OpenAI bid sparks legal chaos and investor doubts: just as he planned?

by February 12, 2025
written by February 12, 2025

OpenAI CEO Sam Altman’s terse “no” at a Paris conference seemed to shut the door on Elon Musk’s surprise $97.4 billion bid.

But experts say the reality is far more complex.

Musk’s play, technically aimed at OpenAI’s nonprofit assets, could be less about acquiring control and more about strategically disrupting Altman’s efforts to reshape OpenAI’s structure.

The Altman plan: from non-profit ideals to for-profit reality

Altman is pushing to transform OpenAI into a fully for-profit entity, a move seen as essential for securing the capital needed to fuel its ambitious AI development.

However, Musk’s unexpected offer throws a wrench into these plans, creating legal and financial uncertainties.

According to Marc Toberoff, the attorney representing Musk and his investors, the core principle is ensuring the non-profit receives adequate compensation.

“If Sam Altman and the present OpenAI, Inc. Board of Directors are intent on becoming a fully for-profit corporation, it is vital that the charity be fairly compensated for what its leadership is taking away from it: control over the most transformative technology of our time,” Toberoff stated in a letter of intent.

The impossibility of a straight sale: decoding OpenAI’s structure

However, experts emphasize that a direct sale of OpenAI’s nonprofit arm is impossible.

OpenAI Inc., which oversees the for-profit business OpenAI LP, can only be owned by another non-profit, as explained by Jill Horwitz, a professor at the UCLA School of Law.

Horwitz clarified that while a sale of the entire entity isn’t feasible, a non-profit’s assets are, in fact, sellable; however, Altman cannot decide whether the organization should be sold, that decision resides in the board of the non-profit.

She also stated that this kind of transaction is “up to the board of the nonprofit and, if the transaction is substantial like this one, with the involvement of the relevant state attorney generals and courts.”

Limited control: even with an acquisition, Musk wouldn’t be king

Even if Musk managed to acquire OpenAI’s nonprofit assets, he wouldn’t gain absolute control.

Michael Wyland, a non-profit governance expert, pointed out that funds from any sale would be earmarked for the nonprofit’s mission.

Crucially, Musk wouldn’t automatically control OpenAI’s nonprofit board, unless the sales agreement specifically granted him that power.

Musk’s motivations go beyond mere acquisition.

His long-standing feud with Altman, stemming from his departure from OpenAI after failing to gain control, and a subsequent lawsuit alleging a deviation from its original mission, suggest a more complex strategy.

Rose Chan Loui, founding executive director of the Lowell Milken Center for Philanthropy & Nonprofits at UCLA Law, believes that simply making the bid “sets a floor”.

And forces OpenAI to respond to the bid, complicating Altman’s plans to turn OpenAI from a for-profit entity controlled by a nonprofit into an entirely for-profit company.

Loui also stated that, according to Delaware law, the state where OpenAI’s nonprofit was founded, and the fact that OpenAI is attempting to buy the nonprofit’s assets itself, once a company has said it’s considering a sale, it must at least consider unsolicited bids by outsiders.

A disruptive gambit: complicating funding and increasing scrutiny

From a funding perspective, Tunguz, the General Partner at Theory Ventures, believes that Musk’s actions “complicate everything,”

He also compared it to game theory, saying that the management team for OpenAI must figure out how to deal with Musk’s bid.

That also mean that they have to figure out how to negotiate in a way that keeps prospective investors happy, so the plan to turn the company into a for-profit “can continue in a way that the Attorneys General in California and Delaware can understand and publicly support?”

OpenAI is reportedly in the final stages of securing a $40 billion investment from Japan’s Softbank, which would value the company around $300 billion.

Musk’s move introduces added uncertainty to OpenAI’s crucial relationship with its primary financial backer, Microsoft.

Tunguz also mentioned that whether the bid fails or not, now all of a sudden OpenAI has to spend a lot more time on understanding all these legal questions, working with the Attorney Generals of these states, and it’s just friction.

Playing the long game: more than just a takeover attempt

Steve Jang, founder and managing partner at Kindred Ventures, sees the situation as a “long chess game” given Musk’s standing not only as an OpenAI ex co-founder with a grudge, but as the owner of OpenAI competitor, X.ai.

Jang explained that “It says to shareholders of OpenAI, if you are ever willing to sell, I’m a buyer.”

Jang also stated that, in general, Musk likely had no expectation that the board would approve the bid, “But it does create a necessary review and vote,” he told Fortune.

“And it says to the market, this is what we imply the value of OpenAI to be.”

The post Elon Musk’s OpenAI bid sparks legal chaos and investor doubts: just as he planned? appeared first on Invezz

0 comment
0
FacebookTwitterPinterestEmail

previous post
Meta layoffs: workers challenge Zuckerberg’s ‘low performer’ justification
next post
S&P 500 futures hold steady as market braces for inflation report and Fed signals

related articles

Asian markets close: Nikkei, Kospi down; Sensex closes...

May 19, 2025

Qualcomm unveils AI chips for data centres with...

May 19, 2025

Best crypto to buy now: Bitcoin Pepe leads...

May 19, 2025

JPMorgan cuts Netflix rating, citing balanced risk-reward post-rally;...

May 19, 2025

Bitcoin ETF open interest dips 5% to $29.47B...

May 19, 2025

US stocks slip in the red on Monday:...

May 19, 2025

Should Klarna IPO remain on watch list after...

May 19, 2025

Why this brokerage downgraded UnitedHealth’s rating to ‘hold’

May 19, 2025

Nvidia opens NVLink Fusion ecosystem, expands Taiwan footprint...

May 19, 2025

Cathie Wood says Trump’s tariffs could unlock tech...

May 19, 2025
Enter Your Information Below To Receive Free Trading Ideas, Latest News, And Articles.


Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest News

  • European stocks gain on auto tariff hopes, but LVMH slump clouds outlook

    April 15, 2025
  • Trump inks trade deal with UK, previews China trade negotiations during 16th week in office

    May 10, 2025
  • New Starbucks CEO Brian Niccol outlines priorities to end coffee chain’s slump

    September 10, 2024
  • North Korea expands list of crimes punishable by death: report

    September 28, 2024
  • Trump rattles off ‘flagrant scams’ uncovered by DOGE, takes aim at Fort Knox in CPAC speech

    February 23, 2025

Popular Posts

  • 1

    Secret Service admits leaning on ‘state and local partners’ after claim it ignored Trump team’s past requests

    July 21, 2024
  • 2

    Elon and Vivek should tackle US funding for this boondoogle organization and score a multimillion dollar win

    December 4, 2024
  • 3

    Forex Profit Calculator: Maximize Your Trading Potential

    July 10, 2024
  • 4

    Five more House Democrats call on Biden to drop out, third US senator

    July 19, 2024
  • 5

    Biden calls to ‘lower the temperature’ then bashes Trump in NAACP speech

    July 17, 2024

Categories

  • Economy (829)
  • Editor's Pick (4,723)
  • Investing (624)
  • Stock (773)

Latest Posts

  • China’s secret weapon in the space race is already hurting us

    November 27, 2024
  • UK’s Starmer juggles trouble at home as he walks geopolitical tightrope with Trump

    February 27, 2025
  • Trump returns to Europe for the 1st time following election win for Notre Dame’s reopening

    December 6, 2024

Recent Posts

  • As retailers drop DEI programs, Black founders could face obstacles to staying on shelves

    February 14, 2025
  • AI accusations mar UK election as candidate forced to defend authenticity: ‘I am a real person’

    July 21, 2024
  • Biden set to address nation after pressured exit from 2024 race

    July 24, 2024

Editor’s Pick

  • Wayfair CEO likens home goods slowdown to 2008 financial crisis

    August 2, 2024
  • ‘Great job’ or ‘no idea what he’s doing’? Elon Musk email sets Capitol Hill ablaze

    February 28, 2025
  • FLASHBACK: Comey had another anti-Trump seashell photo moment during 2024 election

    May 16, 2025
  • About us
  • Contacts
  • Privacy Policy
  • Terms & Conditions

Disclaimer: moneyrisetoday.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2025 moneyrisetoday.com | All Rights Reserved

Money Rise Today – Investing and Stock News
  • Economy
  • Editor’s Pick
Money Rise Today – Investing and Stock News
  • Investing
  • Stock