OpenAI Board Unanimously Rejects Elon Musk’s $97.4 Billion Takeover Bid Amid Legal and Ethical Clash

In a decisive move underscoring the deepening rift between OpenAI and its co-founder Elon Musk, the company’s board announced on Friday that it had unanimously rejected Musk’s $97.4 billion bid to acquire the nonprofit entity governing the AI pioneer. The rejection marks the latest escalation in a years-long conflict over OpenAI’s mission, governance, and transition to a hybrid profit-driven model.

Key Developments

1. Rejection of Musk’s Bid
   OpenAI’s board chairman, Bret Taylor, declared the company “not for sale” in a public statement, emphasizing that any restructuring would prioritize strengthening its nonprofit mission to ensure artificial general intelligence (AGI) benefits humanity. Musk’s offer, framed as an effort to “refocus OpenAI on open-source AI,” was dismissed as a disruptive tactic by the board, which accused Musk of attempting to undermine competition. Musk’s legal team had previously conditioned the bid on OpenAI reverting to a fully nonprofit structure, a demand the board deemed incompatible with its current hybrid model. The bid valued OpenAI’s nonprofit arm at $97.4 billion—$30 billion above ongoing negotiations with other investors—a figure critics argue was designed to destabilize the company’s fundraising efforts.
2. Legal and Antitrust Battles
   The rejection follows Musk’s ongoing lawsuit against OpenAI and CEO Sam Altman, filed in 2024, which accuses the company of abandoning its original open-source, safety-first principles to prioritize profits through its partnership with Microsoft. Musk’s legal claims include breach of contract and unfair business practices, demanding OpenAI restore its AGI technologies to open access and block Microsoft from commercializing them. Adding weight to Musk’s challenges, U.S. antitrust regulators—the Department of Justice (DOJ) and Federal Trade Commission (FTC)—filed a brief in January 2025 supporting his arguments. They warned that OpenAI’s restructuring into a for-profit entity, coupled with overlapping board ties to Microsoft, risked anticompetitive practices.
3. Strategic Shifts and Investor Dynamics
   OpenAI’s transition to a hybrid model—a nonprofit parent with a for-profit subsidiary—has been central to its ability to fund AGI development. However, this shift has drawn criticism from Musk and others who argue it compromises transparency and public safety. The company is reportedly nearing a $40 billion investment from SoftBank at a $260 billion valuation, a deal Musk’s bid sought to disrupt. Microsoft, which holds exclusive licensing rights to GPT-4 and an observer seat on OpenAI’s board, remains a key player. Musk alleges that Microsoft’s influence prevents OpenAI from declaring GPT-4 as AGI—a move that would trigger open-source obligations under the original founding agreement.

Industry and Ethical Implications

• Mission vs. Profit: The conflict highlights a broader debate in AI governance. While OpenAI insists its hybrid model is necessary to fund AGI safely, Musk and regulators argue that profit motives risk sidelining ethical safeguards.
• Open-Source Advocacy: Musk’s push to revive OpenAI’s open-source roots resonates with a growing faction of developers and researchers concerned about corporate control over AGI. However, OpenAI contends that proprietary safeguards are essential to prevent misuse.
• Regulatory Scrutiny: The DOJ and FTC’s involvement signals heightened regulatory attention on AI monopolies, particularly as Microsoft consolidates its grip on critical AI infrastructure.

Looking Ahead

The standoff between Musk and OpenAI is unlikely to resolve soon. Legal proceedings over the company’s governance and Microsoft’s role are expected to intensify, while SoftBank’s potential investment could further entrench OpenAI’s for-profit trajectory. As Altman stated in 2024, “Scaling AI responsibly requires resources only the private sector can provide”—a stance Musk continues to challenge as a betrayal of OpenAI’s founding ideals.

The outcome of this clash will shape not only OpenAI’s future but also the balance between innovation, profitability, and ethical accountability in the race for AGI.