AI feud: How Musk and Altman's partnership turned toxic

What sparked the rivalry?

Musk and Altman were among the 11-person team that founded OpenAI in 2015. Created as a counterweight to Google’s dominance in artificial intelligence, the project got its initial funding from Musk, who invested $45 million to get it started.

Three years later, Musk departed OpenAI. The company initially cited “a potential future conflict for Elon…as Tesla continues to become more focused on AI,” noting the electric vehicle company’s ambitions in autonomous driving.

However, subsequent lawsuits revealed a more contentious story: OpenAI claimed Musk left after his attempts to become CEO or to merge the company with Tesla were rejected.

The situation remained relatively quiet until November 2022, when OpenAI’s release of ChatGPT created a global technology sensation — one that didn’t feature Musk at its center and which made Altman a star.

Musk quickly began criticizing the company, trolling it on social media for keeping its source code private and signing a widely publicized manifesto calling for a pause in AI development, even as he pursued his own AI projects.

The conflict escalated in August 2024 when Musk refiled a lawsuit against OpenAI and its backer Microsoft, claiming the ChatGPT maker had betrayed its founding mission of benefiting the public good in favor of pursuing profits.

Musk later updated the lawsuit to prevent OpenAI’s conversion to a for-profit company — a change Altman considers crucial for the company’s development.

Buy OpenAI?

OpenAI’s unusual structure — a non-profit with a money-making subsidiary — reflected its idealistic origins as a counter to Google.

However, the massive costs of designing, training, and deploying AI models have forced the company to seek a new corporate structure that would give investors equity and provide more stable governance.

This need for stability became particularly evident after a 2023 boardroom coup briefly saw Altman fired, only to be reinstated days later following Microsoft’s intervention.

The transition to a traditional for-profit company requires approval from California and Delaware authorities, who will scrutinize how the non-profit arm of OpenAI is valued when it becomes a shareholder in the new company.

Current investors prefer a lower valuation to maximize their share of the new company.

Musk’s bid, valuing the OpenAI non-profit at $97.4 billion — approximately $30 billion above current negotiations according to The Information — appears designed to disrupt the company’s fundraising efforts.

“Overall this is Musk’s attempt to hurt OpenAI’s conversion into a non-profit to slow them down. I doubt Musk’s business rationale for the bid will play out in his favor,” said Lutz Finger , visiting senior lecturer at Cornell University.

Trump attention?

Musk’s latest move to undermine his former ally came shortly after Altman made an appearance at the White House, announcing his involvement in Stargate, a Donald Trump-sponsored AI infrastructure project partnering with Japan’s SoftBank.

Musk, who plays a central role in the Trump White House, immediately criticized the $500 billion AI project claiming the funding wasn’t secured in an apparent dissension with the president.

Facing the barrage of hostility from the Tesla billionaire, Altman has increasingly suggested that Musk’s actions stem from regret over leaving OpenAI in 2018, particularly as Musk’s competing venture, xAI, struggles to gain traction despite massive investments.

“He’s just trying to slow us down. He obviously is a competitor,” Altman told Bloomberg TV.

“I wish he would just compete by building a better product…. Probably his whole life is from a position of insecurity. I don’t think he’s a happy person. I do feel for him.”