The News
OpenAI Chairman Bret Taylor on Tuesday declared the startup is not up for sale after Elon Musk made an unsolicited, $97.4 billion bid for the company he helped found.
“Our job as a board is to exclusively decide what benefits our mission,” Taylor told a Wall Street Journal conference. “As a consequence, I think this is largely a distraction and I think the board is going to continue to exclusively focus on the mission.”
OpenAI’s Sam Altman is leading a restructuring of the company to separate the nonprofit overseeing it from the for-profit business, which requires valuing the commercial operations.
Musk’s bid could put pressure on that effort, and make it more expensive.
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Reed’s view
Elon Musk’s shrewd chess move Monday shouldn’t be looked at through the lens of M&A. While he is rushing to catch up to and ultimately surge past OpenAI with his own competing startup, there’s another race going on here: the one between the US and China. And one question is whether it’s helpful for the US that two of the biggest US players in AI are battling so bitterly.
The answer, probably, is yes. This is capitalism. Musk’s bid shows that even if OpenAI were to collapse, there is abundant capital looking to push the technology forward. Intense competition — if it doesn’t kill companies — makes them stronger.
When the US was embroiled in the Cold War with the Soviet Union, American companies still intensely fought each other. We had IBM vs the Seven Dwarfs, Boeing vs McDonnell Douglas, and Texas Instruments vs Fairchild Semiconductor, among others.
Fast forward to today, with Elon and Sam duking it out. They’ve pushed each other to move faster, be more aggressive, and get creative with how they build out the infrastructure needed to take AI to the next level.
If all the AI companies here were getting along, the US would be in trouble.
Room for Disagreement
Bloomberg’s Matt Levine points out that, based on the sheer size of Musk’s bid, OpenAI’s board may have a fiduciary responsibility to accept it.
“You are left with the absolutely bizarre circumstance that a nonprofit plausibly might have a fiduciary obligation to sell to the highest bidder, even if it finds that highest bidder unsavory and uncharitable,” he wrote. “What if it got a topping bid from the Chinese Communist Party? What if a robot wearing a fake mustache came in and said ‘I will pay $150 billion for your company and will not use it to take over the world and enslave humanity, what even gave you that idea?’ Would the charity’s obligation — its obligation not to give assets away to a for-profit company, but to be paid fair value for them — require it to sell to the highest bidder?”
Notable
This New York Times article does a good job of explaining OpenAI’s unusual structure and how it hopes to change it.