Musk’s Lawyer Seeks to Force OpenAI to Auction Off Stake
Conflict Intensifies Between Elon Musk and OpenAI’s CEO Sam Altman
A lawyer for Elon Musk has called on the California and Delaware attorneys-general to force OpenAI to auction off a large stake in its business, intensifying a bitter fight with the company’s CEO, Sam Altman.
Background
OpenAI, a non-profit organization dedicated to ensuring AI benefits humanity, was founded by Musk and nine others in 2015. Musk was the most significant early funder before leaving the board in 2018 after clashing with Altman. In 2016, OpenAI launched a for-profit subsidiary, which has since raised over $13bn from its biggest backer, Microsoft.
The Dispute
Musk’s camp is seeking to block OpenAI’s plan to convert to a public benefit corporation (PBC), which would allow it to raise capital and pursue charitable initiatives. However, this move would also give up governance control over the company’s operations and business.
The Letter
Musk’s lawyer, Marc Toberoff, wrote a letter to the California and Delaware attorneys-general, arguing that the non-profit entity’s stake in the PBC should be auctioned off to ensure maximum value and uphold its fiduciary duties. The non-profit’s stake in the PBC is likely to be worth tens of billions of dollars.
Reactions
OpenAI has denied plans for such an auction, with one person familiar with the company’s thinking stating that Musk’s camp simply "want more chaos." The company has also suggested that the non-profit’s "significant interest" in the existing for-profit would take the form of shares in the PBC at a fair valuation, determined by independent financial advisers.
Conclusion
The dispute between Musk and OpenAI’s CEO, Sam Altman, highlights the complex corporate governance issues surrounding the company’s plans to convert to a public benefit corporation. The outcome of this conflict will have significant implications for the future of OpenAI and the AI industry as a whole.
Frequently Asked Questions
Q: What is the purpose of OpenAI’s conversion to a public benefit corporation?
A: OpenAI aims to raise capital and pursue charitable initiatives, while giving up governance control over its operations and business.
Q: Why is Elon Musk opposing OpenAI’s conversion?
A: Musk claims that OpenAI and Microsoft are departing from the company’s original mission and that the conversion would allow them to build a for-profit monopoly.
Q: What is the value of the non-profit entity’s stake in the PBC?
A: The stake is likely to be worth tens of billions of dollars.
Q: How does the California and Delaware attorneys-general fit into this dispute?
A: They are responsible for ensuring that OpenAI’s conversion is in the public interest and determining whether the transaction is at a fair price.
