A heated dispute has erupted between two of Silicon Valley’s most influential figures—Elon Musk and his one-time mentee, Sam Altman—over the fate of OpenAI, the organisation responsible for ChatGPT.
Musk, the billionaire at the helm of Tesla and X, has launched multiple legal challenges in an attempt to block Altman’s push to shift OpenAI from its original nonprofit structure to a profit-driven model.
Tensions escalated further this week when Musk made a staggering $97.4 billion bid to take control of OpenAI’s nonprofit division, insisting that the company must uphold its founding goal of developing artificial general intelligence for the benefit of all. Altman swiftly dismissed the proposal.
Most recently, Musk’s legal representatives announced on Wednesday that he would retract his offer if OpenAI remained a nonprofit—a move that would restrict the firm’s ability to secure significant financial backing. But how did it all begin?
The origin of the feud
OpenAI's transition from 'non-profit' to a 'for profit' organisation is at the heart of the dispute between Elon Musk and OpenAI’s leadership. So what does this mean?
A nonprofit organisation operates with the primary goal of serving a mission or public interest rather than generating financial returns for its owners or investors. In OpenAI’s original structure, it was established as a nonprofit research lab with the mission of ensuring artificial general intelligence (AGI) benefits all of humanity. The idea was that OpenAI would develop AI technology transparently, without prioritising financial gains.
On the other hand, a for-profit entity focuses on generating revenue and increasing value for shareholders or investors. When OpenAI introduced a "capped-profit" model in 2019, it essentially created a hybrid structure—OpenAI LP, a for-profit subsidiary, to attract investment while still being governed by the nonprofit parent entity. This model allowed investors and employees to earn returns, but within limits, to balance profit-making with OpenAI’s broader mission.
Recently, OpenAI has moved further toward a more conventional for-profit model, securing massive funding from companies like Microsoft and shifting decision-making power away from the nonprofit board, which originally had full oversight.
Why is Musk against OpenAI's transition?
Musk, a co-founder and early backer of OpenAI, opposes its shift toward a profit-driven model, arguing it betrays its original nonprofit mission to develop AI safely, free from commercial pressures. Reportedly, he is particularly concerned about Microsoft’s growing influence, fearing AGI could become controlled by a corporate giant prioritising profit over public good.
Notably, Musk and Altman were once close collaborators, having co-founded OpenAI in 2015 alongside other leading experts in artificial intelligence. Both initially served as co-chairs, though Musk was already a dominant figure in Silicon Valley at the time.
In reaction to OpenAI's push toward a for-profit model, a consortium of investors, led by Elon Musk’s x.AI, put forward a massive $97.4 billion bid this week to take over the company. However, OpenAI CEO has swiftly rejected the proposal, arguing that it would derail the company's ongoing transition from a nonprofit—a move Musk has been actively trying to prevent through legal action.
Musk’s legal team maintains that the buyout offer is legitimate and insists OpenAI should be compensated at fair market value, in line with what an independent buyer would be willing to pay.
How has OpenAI responded?
In response to Musk's offer, OpenAI’s board remains firm, with its legal representative dismissing Musk’s bid, stating that it “does not establish a value for OpenAI’s nonprofit” and reiterating that the nonprofit “is not for sale”.
OpenAI was originally established as a nonprofit, prioritising AI research and safety over financial gain. However, according to OpenAI, challenges arose in 2017 when it became evident that achieving artificial general intelligence would require significantly greater computing power and an investment of hundreds of millions of dollars.
Internal emails published by OpenAI suggest that Musk proposed transitioning to a for-profit model with himself at the helm. As tensions grew over the company’s direction, Musk allegedly cut off funding in response.
In 2018, Musk parted ways with OpenAI, though he initially remained supportive of its mission. Years later, he expanded his own AI ambitions—acquiring Twitter in 2022 and launching xAI in 2023.
Since his departure, OpenAI has undergone significant transformations. In 2019, it established a for-profit subsidiary to attract investment, blending nonprofit principles with commercial strategy. By 2022, the company—along with Altman—shot to global prominence following the launch of ChatGPT.
