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Shortly after Elon Musk made a surprise $97 billion bid for OpenAI’s assets on Monday, its CEO Sam Altman told staff in a message that its board of directors intends to make clear it has no interest in Musk’s “supposed ‘bid’” and that the offer wasn’t in the interest of OpenAI’s mission to develop advanced artificial intelligence for all of humanity, according to a person who saw the message.

The letter indicates that OpenAI’s 10-person board is backing Altman in his fight against Musk’s monthslong effort to prevent the for-profit arm of OpenAI, which develops ChatGPT and other products, from getting out from under the control of OpenAI’s nonprofit by converting to a public benefit corporation. Musk is arguing that the nonprofit will be shortchanged by the conversion.

Altman rejected the offer on X earlier Monday, but it wasn’t clear if he was doing so with backing of the board. Nearly all of the directors joined after Altman was briefly fired, then rehired, by the nonprofit’s directors in late 2023.

Altman told staff about the board’s imminent rejection of Musk’s bid before he or the board saw an official offer letter from Musk, according to the message, and he referred to the effort as “just embarrassing to watch.”

Musk has sued OpenAI for allegedly defrauding him into making substantial donations to the nonprofit after cofounding it in 2015 with Altman and others. Altman and OpenAI have denied his charges. A U.S. district judge said in a hearing last week that she was leaning in favor of OpenAI in its initial defense against Musk’s effort to halt the planned conversion.

Altman launched OpenAI’s for-profit arm in 2019, with the nonprofit overseeing it. The for-profit arm later developed ChatGPT in 2022, and Musk started an OpenAI rival, xAI, in 2023.

In making his bid, Musk and a consortium of investors essentially placed a value on the nonprofit assets that’s higher than their theoretical current value.

Under the current structure, both the nonprofit and Microsoft, OpenAI’s largest outside shareholder, are in line to receive billions of dollars in profits if the company generates them. After the conversion, the nonprofit arm would end up with a stake of at least 25% in the corporation, The Information has reported, and Microsoft would also end up with a big stake.

OpenAI’s for-profit arm was valued at $150 billion in a financing last fall, which means the value of the nonprofit’s proposed stake following the conversion would be far less than what Musk is offering—even if the nonprofit got a 50% stake.

Musk’s team estimates that the nonprofit’s assets—control over the for-profit and rights to some of its future profits—is essentially equivalent to a 51% stake in the for-profit, meaning Musk is valuing the for-profit arm at about $190 billion. The for-profit arm is now in the midst of raising equity funding from SoftBank at a pre-investment valuation of $260 billion, but the deal hasn’t closed.

Last month, Musk’s lawyer sent a letter to the attorneys general in Delaware, where OpenAI is incorporated, and California, where it is based, arguing that OpenAI should auction off the nonprofit’s stake in the business to ensure the nonprofit is fairly compensated for the for-profit conversion. Monday’s bid could be another effort to get the attention of those state officials, who have so far not taken steps to stop the conversion.

If Musk succeeds in raising the potential market value of the nonprofit’s assets, it could dilute the value of stakes held by OpenAI’s investors in the for-profit arm, including Microsoft.

The announcement underscores efforts from the EU to position itself as a key player in the AI race

The European Union pledged to mobilize 200 billion euros ($206.15 billion) to invest in artificial intelligence as the bloc seeks to catch up with the U.S. and China in the race to train the most complex models.

European Commission President Ursula von der Leyen said that the bloc wants to supercharge its ability to compete with the U.S. and China in AI. The plan—dubbed InvestAI—includes a new 20 billion-euro fund for so-called AI gigafactories, facilities that rely on powerful chips to train the most complex AI models.

“We want Europe to be one of the leading AI continents, and this means embracing a life where AI is everywhere,” von der Leyen said at the AI Action Summit in Paris.

The announcement underscores efforts from the EU to position itself as a key player in the AI race. The bloc has been lagging behind the U.S. and China since OpenAI’s 2022 release of ChatGPT ushered in a spending bonanza.

The EU pledge comes a month after Washington announced Stargate, an AI joint venture that aims to build data centers in the U.S. for OpenAI. OpenAI, SoftBank Group, Oracle and MGX are the initial equity funders in Stargate, while Arm, Microsoft and Nvidia are technology partners. The companies are committing $100 billion initially and plan to invest up to $500 billion over the next four years.

Meanwhile, Beijing has also made strides in the technology. Chinese company DeepSeek developed AI models that it said nearly matched American rivals despite using inferior chips, raising questions about the need to spend huge sums on advanced gear provided by Nvidia and other tech giants.

“Too often I hear that the EU is late to the race,” von der Leyen said, insisting it was “far from being over.”

The commission’s initial funding for InvestAI will come from existing EU programs, though member states can also contribute. InvestAI will include a layered fund, with shares of different risk and return profiles.

The EU is aiming to establish gigafactories to train the most complex and large AI models. Those facilities will be equipped with roughly 100,000 last-generation AI chips, around four times more than the number installed in the AI factories being set up right now.

The bloc in December selected several consortia to establish seven AI factories, with plans to announce another five soon. Von der Leyen said the InvestAI fund would finance AI gigafactories through a mix of grants and equity.

News Corp, owner of Dow Jones Newswires and The Wall Street Journal, has a content-licensing partnership with OpenAI.

Elon Musk gatecrashes OpenAI restructuring

The ongoing operatic rivalry between the billionaire and OpenAI chief Sam Altman remains a major subtext

One of the most complex deals in history was already in process. And then on Monday afternoon Elon Musk arrived. A Musk-led consortium said it would pay precisely $97.4bn for OpenAI, the artificial intelligence start-up. But the bounty is not for the operating business — it is for the non-profit vehicle that at present manages the OpenAI enterprise.

Musk’s rival Sam Altman — chief executive of OpenAI — is in the midst of a complicated negotiation to collapse the non-profit and for-profit entities into a single structure. Such a streamlining is ostensibly necessary to attract the further tens of billions of investment needed to build and commercialise the large language model. A current fundraising round is set to value OpenAI at $260bn.

In simpler times, a decade or so ago, the OpenAI non-profit/for-profit distinction was an idealistic nod, aiming to ensure that artificial intelligence was managed responsibly and “for the benefit of humanity”. But the technology turned out to be so good that the org chart was spoiling the value creation opportunity. Adding to the issue, Microsoft had invested $13bn in OpenAI but its profit stream was structured to be capped at a pre-specified return.

The form and the financing of the new bid from Musk and his co-investors — cash, stock, something else — is so far unknown. And the value he has ascribed is something like three times greater than what was expected to be paid for the non-profit piece of OpenAI.

The profit-seeking OpenAI enterprise is structured as a limited liability company that does not come with traditional fiduciary duties attached. The non-profit arm, which has raised more than $100mn in donations, is supposed to uphold its mission and its board members include the likes of economist Lawrence Summers and dealmaker Adebayo Ogunlesi.

The ongoing operatic rivalry between Musk and Altman remains a major subtext. Musk had been involved in OpenAI in its early days and stands to make money when the non-profit is bought out. He also has his own AI venture, xAI, which makes his obsession with OpenAI — including a previously filed lawsuit about the restructuring — look curious.

Given the LLC and non-profit status of the OpenAI entities, they do not have to engage with the Musk bid, or any other that they may receive, if they do not wish to. Altman, for his part, responded tartly on X on Monday, that he would instead be willing to buy X from Musk for $9.74bn, a tenth of the Musk OpenAI offer and a fraction of the $44bn Musk paid for Twitter.

Coming to a deal on the OpenAI restructuring was never going to be simple. Musk’s gatecrashing at a minimum will now add a bright spotlight on the negotiations and, specifically, how much of a hard bargain the non-profit is going to drive.