from Hacker News

Musk-led group makes $97B bid for control of OpenAI

by jdoliner on 2/10/25, 8:42 PM with 978 comments

  • by irs on 2/10/25, 9:15 PM

    Sam’s reply on twitter[0]

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

    [0]https://x.com/sama/status/1889059531625464090?

  • by TheAlchemist on 2/10/25, 10:31 PM

    "The bid is being backed by Musk's AI company xAI, which could merge with OpenAI following a deal, according to the Wall Street Journal which first reported Musk's offer earlier on Monday."

    xAI is not making any money - it's a money furnace, so what does it mean the bid is backed by xAI ? The leverage and 'creativity' in the US is off the charts. Dotcom bubble starts to look reasonable.

  • by averageRoyalty on 2/10/25, 9:31 PM

    With first mover advantage disappearing for OpenAI and very good alternatives appearing, one wonders how long they can sustain a multi billion dollar per year loss[0].

    The launch of ChatGPT was earth shaking, but what have they done since that impacts or excites the average consumer? Does their revenue even come from the average consumer, or primarily from API users that will lift and shift to a viable competitor?

    I don't know, but I'm very curious to see how they can hold their lead and be attractive in the longer term.

    0. https://www.cnbc.com/2024/09/27/openai-sees-5-billion-loss-t...

  • by Layvier on 2/10/25, 11:15 PM

    > "It's time for OpenAI to return to the open-source, safety-focused force for good it once was," Musk said in the press release. "We will make sure that happens.""

    From the creator of Grok, this is such an insane thing to say

  • by mppm on 2/11/25, 10:13 AM

    I think a relevant bit of context for this move are the restructuring negotiations with Microsoft. Matt Levine has some excellent commentary on this [1][2], as usual. In short, due to their unusual "capped-profit" investment, Microsoft has first dibs on a very large chunk of hypothetical future profit. While the details are not public, a "low" valuation of 100B would imply that Microsoft is entitled to a controlling stake in the restructured for-profit, while a 1T valuation would proportionally imply a much smaller slice of the pie.

    Presumably, Musk is trying to throw a wrench into these negotiations, by putting a valuation on the low end on the table, while Altman's "counteroffer" to buy Twitter for 9.74B sort of claims that this is too low by a factor of 5 to 10-ish.

    1. https://www.bloomberg.com/opinion/articles/2024-10-21/who-ow...

    2. https://archive.is/nHG3P

  • by pcj-github on 2/11/25, 12:12 AM

    The one thing Musk does not have in his drive for total world domination is AI.

    Don't let him get it. Profoundly dangerous.

    Watch as he attempts to use the levers of the now illegitimate US government to force the outcome.

  • by eaglelamp on 2/11/25, 7:38 AM

    ChatGPT gov launched in January. Musk is using DOGE to hoover up tons of government data and reportedly using 'AI' technology to analyze it. There seems to be a rush to insert 'AI' into government processes, and with the government, unlike the consumer market, being the first to market will build a significant moat.

    Of course this will lead to conflict between Altman and Musk as they rush to entrench themselves within the current administration. This buyout offer could be an effective tactic to delay the pending funding from Softbank, and in turn the kick off of stargate, while DOGE gets up to speed. Even a short delay could be impactful in the early days of an aggressive and fickle administration.

  • by bpodgursky on 2/10/25, 9:42 PM

    > Elon's offer to purchase the OpenAI nonprofit for $97.4billion isn't going to happen, but it may seriously complicate OpenAI's efforts to claim the nonprofit is fairly valued at $40billion. If you won't sell it for $97.4billion, that means you think it's worth more than that.

    https://x.com/KelseyTuoc/status/1889064215710941594

  • by alpha_squared on 2/10/25, 9:52 PM

    It feels like Musk is single-handedly making a great case for why unlimited accumulation of wealth is a bad idea.

    It's pretty colorful language, but my mind immediately jumps to "financial terrorist". He's using his enormous amount of wealth and influence as a weapon to bludgeon anyone and anything in his way.

  • by WiSaGaN on 2/10/25, 10:00 PM

    I think this is a negotiation tactic that aims to eventually block OpenAI's transition to for-profit.

  • by ChrisArchitect on 2/10/25, 9:22 PM

  • by gsibble on 2/10/25, 8:55 PM

    So, from what I have read about spinning a for-profit off from a non-profit, the for-profit needs to be purchased from the non-profit at market value. There have been a lot of questions about how MSFT or OpenAI's other investors would fund the purchase of the for-profit entity.

    I think what this does is set a floor valuation with a fully backed bid that the non-profit would get IN CASH for essentially buying the for profit.

    This really messes up OpenAI's plans because it means someone else would have to bid more and be willing to part with the cash in order for OpenAI to spin off.

    Actually a brilliant move that gums up OpenAI's plans.

  • by creddit on 2/10/25, 11:44 PM

    A lot of people are unsurprisingly throwing shade on Musk being involved here but I think it's really important to understand what this is fundamentally about: stopping or fundamentally changing OpenAI's plans to be spun off.

    The issue at hand is that OpenAI (the private, currently "capped profit" entity, henceforth in this post referred to as OpenAI-P) is trying to get spun out of control of the OpenAI non-profit (henceforth referred to as OpenAI-NP).

    In order to do this, OpenAI-P must compensate OpenAI-NP for its ownership of OpenAI-P. Currently they are trying to value this at $40B. This is a swindling for numerous reasons. Firstly, OpenAI-NP has complete control over OpenAI-P. They OpenAI-NP board can do whatever it wants with OpenAI-P. OpenAI-P has some financial obligations to those who have purchased its PPU (its equity instrument) but ultimately OpenAI-NP controls OpenAI-P and could do whatever it wants with it (eg shut it down, fire Sam Altman on a whim, etc). Further, the cashflows that OpenAI-NP still has ownership of are, at least under the claims of people like Sam A, clearly worth dramatically more than the $40B valuation would imply.

    In addition, the OpenAI-NP mission is "Our mission is to ensure that artificial general intelligence—AI systems that are generally smarter than humans—benefits all of humanity". The control of the leading AI Lab is the only way that they can possibly live up to their mission. To abdicate control of OpenAI-P is to abdicate their mission. If the OpenAI-NP board follows their mission as they are obligated to, they cannot possibly be willing to abdicate this control and they must surely value it far beyond $40B.

    EDIT TO ADD TL;DR - Musk is trying to force OpenAI to value OpenAI-NP's stake in OpenAI-P at a reasonable level which is far greater than the current $40B which will help Musk by potentially derailing OpenAI-P's goal to be spun off.

  • by mmastrac on 2/10/25, 9:31 PM

  • by typs on 2/10/25, 9:43 PM

    Notably a steep discount from their recent raise at a 157B. The board would never approve.

  • by kennethologist on 2/10/25, 9:59 PM

    WSJ Full Article: https://archive.is/Uygax

  • by kweingar on 2/11/25, 1:13 AM

    Regardless of how you feel about the potential consequences of Musk being a significant shareholder of OpenAI, the alternative is not to let sama and other preferred investors buy the non-profit's stake at a >50% discount as they had planned to do before this offer.

  • by miramba on 2/11/25, 6:58 AM

    Rather than discussing crazy Elon, I would like to hear insights on what this means? Why does he want OpenAI? Is there a chance to ever get this money back? Who is financing this after the twitter failure?

  • by Ajedi32 on 2/10/25, 9:38 PM

    > to buy the nonprofit that controls OpenAI

    What does it mean to buy a nonprofit? Who owns it now? Does anyone?

  • by whatever1 on 2/10/25, 11:41 PM

    I see clear sentiment change in HN. And that is why I love this forum. People here do change their opinions when presented with facts :) Proud to be a member of the community.

  • by rkagerer on 2/10/25, 9:45 PM

  • by htrp on 2/10/25, 8:49 PM

    This seems like the opening shot in a negotiation for Elon to own more of the PPU's that get converted into common from his original 2016 investment.

  • by digitaltrees on 2/11/25, 1:59 AM

    I think this was the final item for “Elon Bond villain” bingo

  • by sidibe on 2/10/25, 11:02 PM

    Good it was reprehensible that tech attention or gullible government/bank money would be going to something that isn't owned by Elon. Only he can save us

  • by Trasmatta on 2/10/25, 9:46 PM

    This would be a disaster.

    Elon Musk is continually pushing for singular control of everything (not least of which is the US federal government). It makes me immensely uncomfortable.

  • by esskay on 2/10/25, 11:52 PM

    Well...at least we know what those scammy as fuck crypto scemes for Donald and Melania were for.

  • by roody15 on 2/11/25, 10:55 AM

    This is an odd thread. If a group is able to take control and prevent OpenAI from becoming a for profit corporation would be a welcome development.

  • by more_corn on 2/11/25, 2:58 PM

    Who is still give that guy money after the failure of Twitter and the impending collapse of Tesla stock?

  • by neilv on 2/11/25, 1:09 AM

    Recalling that almost all the OpenAI employees signed to support the reinstatement of Altman... it'd be funny if all someone else had to do to seize control of OpenAI was to offer the employees more money.

  • by LeicaLatte on 2/11/25, 7:53 AM

    More pot stirrer than ai overlord kind of move by Musk here.

  • by skc on 2/11/25, 7:19 AM

    Is he finding it hard to get anyone to care about grok?

  • by gsibble on 2/10/25, 8:56 PM

    A bird in hand is worth two in the bush and a judge will see it that way if the non-profits directors balk at this based upon an investment valuation.

  • by sidcool on 2/11/25, 4:25 AM

    No. I don't like this. Too much power concentrated in the hands of a single individual. I admire Musk, but I firmly believe never put anyone on a pedestal. I hope this does not happen.

  • by lysace on 2/10/25, 9:24 PM

    He also has several investors backing him, including Valor Equity Partners, Baron Capital, Atreides Management, Vy Capital and 8VC, a venture firm led by Palantir co-founder Joe Lonsdale. Ari Emanuel, CEO of Hollywood company Endeavor, is also backing the offer through his investment fund.

  • by yowayb on 2/11/25, 7:33 AM

    How would X benefit from such an acquisition?

  • by manav on 2/10/25, 9:45 PM

    Considering Musk's power and the shrinking moat of OpenAI you would think he would be create something better with government support - or as some new department.

  • by k310 on 2/11/25, 7:39 PM

    Why shouldn't he buy everything? He bought the U.S. (sarcasm, I hope)

    OTOH, everything Trump threatens is an invitation to bribery.

    And when it starts to go south for him, Elon's going under the bus, not to re-engineer them.

    Trump's dream is to be the richest man in the world. Someone is in the way as soon as his hatchet man job is done. Nothing has any meaning to Trump but money.

  • by openrisk on 2/11/25, 2:41 AM

    Well, now that Wall Street offloaded the X debt they were stuck with for some time they can support great new ventures.

    It does all have a bit of Wile E Coyote feel to it. Keep gesticulating wildy to propel forwards before inevitably plunging in the abyss below.

    https://www.wsj.com/finance/banks-sell-5-5-billion-of-x-loan...

  • by bamboozled on 2/10/25, 11:12 PM

    Ketamine is a hullava thing.

  • by cratermoon on 2/10/25, 10:16 PM

    Where's he getting that $94.7B, from the US Treasury?

  • by rendang on 2/10/25, 11:22 PM

    > consortium led by Elon Musk

    Are there other major investors involved here or just Musk?

  • by ornornor on 2/11/25, 3:01 PM

    Im expecting the third world war to start anytime now and it will be us against Musk and Trump’s terminators autonomous killing robots. Im half joking when I say that.

  • by sporkland on 2/10/25, 11:34 PM

    Gotta settle ownership in the octagon.

  • by mrtksn on 2/10/25, 9:17 PM

    Isn’t musk becoming a single point of failure risk?

  • by mongol on 2/10/25, 9:31 PM

    I hope we will not see consolidation in this space but instead many competing services. I want a future where I will pay my AI money to someone else than the current set of billionaires.

  • by yakito on 2/11/25, 2:37 PM

    Reminder: don’t trust third parties with your digital belongings. Not because they’re evil, but because they’re third parties. And third parties, by definition, are people who today are on your side and tomorrow will sell you to the highest bidder.

    It happens in life, and it happens on the internet. Today, your digital life, files, photos, chats, etc, are on a server run by a company with a cute logo and a manifesto about privacy. Tomorrow, that company gets bought by a billionaire with lizard-like features, changes its terms and conditions, and your stuff ends up on a marketplace for five cents a bundle.

  • by zkmon on 2/11/25, 7:09 PM

    Yo dogg, I hear you like capitalism. And here is your Musk.

  • by d3vmax on 2/11/25, 2:31 PM

    Musk is salty he left the alliance at the start and now wants back in.

  • by sub7 on 2/11/25, 2:48 AM

    Musk is a Xi surrogate

  • by ulfw on 2/11/25, 3:37 AM

    Sick and tired of idiotic daily Musk Musk Musk news. You can't live life anymore without that nazi doing some random thing. Btw he is out now insulting Altman. Childish and horrible.

  • by sylware on 2/10/25, 10:44 PM

    mmmmh... chat-gpt 5 and their other models are so much a disappointment they want to sell fast?

    That bleeding money went to nvidia(US) and the US electric grid, so its FINE from a US point of view (I don't think a lot went to TSMC(taiwan)).

    Unless openai is transfering significant amount of money outside the US (directly or via some montage).

  • by theatomheart on 2/11/25, 6:12 PM

    Trump put Elon on stage at rallies over and over, letting all of America know if you vote for Trump, he will hire Elon to run DOGE. They were as open about this as a campaign can possibly be. Then, America overwhelmingly voted to have exactly that. Period. End of story. Cry about it any way you want but this is what the people voted for, this is what the people want. Get over yourself. No one cares about your opinion but you. The people have spoken. Deal with it.

  • by gsibble on 2/10/25, 10:03 PM

    How in the hell is this not on the front page?

    Once again, any bad news for OpenAI is censored from reaching the front page of HN.

  • by gdiamos on 2/11/25, 12:44 AM

    Great idea

  • by ggm on 2/10/25, 11:10 PM

    Take the money. It's not Open, and its not A(G)I. You won't get a better deal.

    Great come-back, but at this point, I'd take the money. The field now has nation-state actors, it will almost impossible to sustain a revenue flow for this: price is going down.

    (not an investor)

    BTW the board valuation isn't against sunk cost, its against hyped future value. This may be half the hype but its a shitload more than spend.

  • by idunnoman1222 on 2/11/25, 1:09 AM

    itt technocrats complaining about how bad elon is with tone a reasoning no better than his

  • by hindsightbias on 2/10/25, 10:19 PM

    Couldn't the prior actions and TikTok be taken as precedents for a National Security takeover? Put it under DOGE?

  • by cbar_tx on 2/11/25, 3:11 AM

    The comments here are disturbingly similar to reddit. Is HN broken or what?

  • by WhyOhWhyQ on 2/10/25, 9:22 PM

    Since my goal is to see the failure of LLM technology, I think this is fantastic.

  • by rvz on 2/10/25, 8:49 PM

    It's a bit too late for that and it is not enough.

    The time for such a bid like this was when Sam was was ousted out of OpenAI and in complete state of chaos.

    Investors already put their money in at around $157B+ and are not willing to take a price cut down to less than $100BN.

    Unless that is the amount that Sam wants to walk away with, but its isn't even going to be no where near close to enough.

  • by OutOfHere on 2/10/25, 9:32 PM

    OpenAI is not worth more than 9.74 billion, considering their moat is steadily shrinking and their models aren't even open. Even if OpenAI produces their chips via TSMC, it means that at least AMD can do the same, if not anyone else with just 100 million to spend.