Musk asks state AGs to auction OpenAI stake in nonprofit restructuring, sources tell Reuters
(Reuters) – Billionaire Elon Musk’s lawyer has asked attorneys general in California and Delaware to encourage OpenAI to auction a large stake in its business to determine the fair value of his charitable assets during a corporate restructuring, sources familiar with the matter told Reuters in Thursday.
Musk’s attorney, Marc Toberoff, sent a letter to top government law officials on Tuesday arguing that they should provide a competitive bidding process to determine the fair market value of OpenAI’s charitable assets in order to “protect the public’s beneficial interest,” since startup is working to shed control of its nonprofit, according to sources.
“Elon is practicing law. We remain focused on our mission and work,” an OpenAI spokesperson said in a statement. The startup previously said the valuation of its charitable assets would be determined by independent financial advisers. The Financial Times reported on the letter earlier in the day.
Sam Altman co-founded OpenAI along with Musk and others, and it became one of the world’s biggest tech names after launching artificial intelligence tool ChatGPT in 2022. Backed by Microsoft (NASDAQ: ), OpenAI was valued at $157 billion in October after raising $6.6 billion from investors.
In September, Reuters first reported the ChatGPT maker’s plan to overhaul its corporate structure to make its for-profit operations independent of nonprofit control. The company detailed the plan in late December, saying it would create a public benefit corporation to help it “raise more capital than we envisioned,” and the plan would result in “one of the most well-resourced nonprofits in history.”
Musk, who owns AI startup xAI, is suing OpenAI in an attempt to block OpenAI’s conversion, which he argued was a departure from the mission he funded the company for. The court is likely to rule on the preliminary injunction sought by Musk’s lawyers later this month.
Delaware Attorney General Kathy Jennings got involved in the case by sending an amicus brief to the court on December 29, saying she is currently reviewing the proposed changes to OpenAI.
“That Delaware is on the record claiming to be closely monitoring the situation should definitely undermine the judge’s willingness to block a transaction that Musk and Encode characterize as dangerous, imprudent or the product of a fiduciary breach,” Darryll Jones, a law professor at Florida A&M University wrote in a blog post. Encode is a non-profit AI security organization that has joined Musk’s efforts to block OpenAI’s for-profit transition.
California Attorney General Rob Bonta, who also has jurisdiction, has not commented on the case, despite a letter from Meta (NASDAQ: ) urging him to block it.
