Inside How Musk and Altman Went From Friends to Bitter Enemies

Summary

WSJ Tech News Briefing: Inside How Musk and Altman Went From Friends to Bitter Enemies

Episode Release Date: February 21, 2025
Host: Charlotte Gartenberg
Reporter: Berber Ginn

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Introduction

In this high-stakes episode of the Wall Street Journal's Tech News Briefing, Charlotte Gartenberg delves into the tumultuous relationship between two of the tech industry's most influential figures: Elon Musk and Sam Altman. Once friends and co-founders of OpenAI, their alliance has deteriorated into one of the most personal and public rivalries in recent business history. Reporter Berber Ginn provides an in-depth exploration of how this enmity unfolded, the strategic maneuvers each has employed, and the broader implications for the AI industry.

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From Friends to Founders: The Early Relationship

Charlotte Gartenberg sets the stage by highlighting the once cordial partnership between Musk and Altman:

"They began as friends and business partners... co-founded OpenAI in 2015." [03:42]

Berber Ginn recounts their initial connection:

"Altman was introduced to Musk through a mutual contact, arranged a tour of the SpaceX factory, and was struck by Musk's ambition." [03:42]

Altman's admiration for Musk's vision led to their collaboration in founding OpenAI, with Musk providing significant funding and taking a leadership role in the nascent organization.

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The Power Struggle and Fallout

The camaraderie began to fray as differing visions for OpenAI emerged. By 2017-2018, tensions escalated over control and the company's direction.

Berber Ginn explains:

"Musk wanted more control over OpenAI and sought to become the de facto CEO, leading to a power struggle." [04:38]

Altman, leveraging support from fellow co-founders, countered Musk's bid, ultimately prevailing and solidifying his position as CEO. This internal conflict marked the beginning of their estrangement.

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Musk’s Hostile $97.4 Billion Bid for OpenAI

Musk's frustration culminated in a dramatic move:

"He followed this up with a hostile $97.4 billion bid for the assets of the nonprofit that controls OpenAI." [02:16]

Berber Ginn elaborates on the rationale behind the bid:

"By making this offer, Musk was signaling a valuation of $97 billion, challenging the nonprofit board to consider his terms amidst the transition to a for-profit model." [02:28]

The bid was swiftly dismissed by OpenAI’s board, who deemed it inconsistent with their mission to develop AI for humanity's benefit.

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The Rise of XAI: Musk’s Foray into AI

In response to OpenAI's advancements, Musk launched his own AI venture, XAI:

"Elon Musk raised a flag about OpenAI moving too fast, then launched XAI shortly after ChatGPT's success." [06:33]

Berber Ginn assesses XAI's market impact:

"XAI has struggled to gain traction despite substantial funding and talent recruitment, barely making a noticeable mark against ChatGPT's ubiquity." [06:53]

Despite aggressive strategies, including high-profile advertising, XAI remains a minor player in the competitive AI landscape.

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Stargate Project and Political Maneuvering

A pivotal moment in the rivalry was the Stargate initiative, a half-trillion-dollar investment in AI infrastructure announced with President Trump’s involvement.

Berber Ginn reveals:

"On his first full day in office, President Trump and Sam Altman announced Stargate, a major AI investment." [01:28]

Musk, observing the announcement, reacted angrily, publicly disputing Altman's capabilities and leveraging his influence on social media:

"Musk was livid upon seeing the announcement and took to X to express his displeasure." [01:28]

Berber Ginn further explains how Altman secured political backing:

"Altman collaborated with Masayoshi Son of SoftBank and Larry Ellison of Oracle, both influential figures with ties to Trump, to propel Stargate forward." [09:01]

This strategic alliance enabled Altman to navigate the politically charged environment, securing presidential support despite Musk's opposition.

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Musk's Retraction of the OpenAI Bid

After facing resistance, Musk retracted his hostile bid under specific conditions:

"Musk said he would retract the bid if OpenAI remained a nonprofit, an outcome he deemed unlikely." [10:12]

This move underscored Musk's unwillingness to compromise on OpenAI’s foundational structure, further deepening the rift between him and Altman.

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Implications for the AI Industry and Politics

The feud between Musk and Altman extends beyond personal animosity, significantly impacting the AI sector's trajectory and its intersection with politics.

Berber Ginn outlines the high stakes:

"Control over AI agenda-setting with President Trump and the race to achieve artificial general intelligence are at the core of this rivalry." [10:51]

The competition for AGI dominance drives these tech titans to undermine each other, as securing political favor and technological supremacy are seen as crucial for legacy and industry leadership.

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Conclusion

The once-promising collaboration between Elon Musk and Sam Altman has devolved into a fierce rivalry with substantial consequences for the AI industry's future. As Musk attempts to assert control and challenge OpenAI’s strategic direction, Altman leverages political alliances to advance his vision for AI development. This bitter conflict underscores the intense competition and high stakes inherent in the quest to pioneer artificial general intelligence, shaping the landscape of technology and its governance for years to come.

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Produced by Jess Jupiter. Additional support from Julie Chang, Jessica Fenton, Michael Ovalle, Kathryn Millsop, Ayesha Al Muslim, Scott Salloway, Chris Zinsley, and Falana Patterson.

Transcript

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[Charlotte Gartenberg]

Welcome to Tech News Briefing. It's Friday, February 21st. I'm Charlotte Gartenberg for the Wall Street Journal. It's one of the highest stakes and most personal fights in recent business history. OpenAI CEO Sam Altman versus Elon Musk, the world's richest man and first buddy to President Trump. But Musk and Altman weren't always bitter enemies. They began as friends and business partners. The WSJ spoke with more than a dozen people familiar with Altman and Musk's relationship over the years, as well as OpenAI and Musk's business and political decisions to get the inside story of the meanest fight in business. Our reporter Berber Ginn has been covering this and he's here now to take us through the Bromance to Brawl timeline. Before we get into it, a quick note. News Corp, owner of the Wall Street Journal, has a content licensing partnership with OpenAI. Berber on his first full day in office, President Trump appeared on TV next to OpenAI CEO Sam Altman in the White House to announce Stargate, this half trillion dollar investment in AI infrastructure. Did Elon Musk know about this?

[Berber Ginn]

So Musk actually found out shortly before the announcement was to go live that his nemesis Altman was in the White House and about to do a big announcement with President Trump. Musk was actually in the vicinity and he turns on the TV to actually listen to this announcement. And shortly after our reporting shows that he was livid. He was fuming to people in his circ, basically saying, how did I not know about this? There's no way that Altman has the money secured for this venture. And of course, in classic Musk fashion, he took to X to also tweet his displeasure over the deal in what was actually his first public break with President Trump. So he was definitely not a happy man on that day.

[Charlotte Gartenberg]

Yeah, he followed this up with a hostile $97.4 billion bid for the assets of the nonprofit that controls OpenAI. What's the business case for that?

[Berber Ginn]

Zooming out. He wants to throw a wrench into what are these very high stake negotiations for OpenAI to convert from a nonprofit to a for profit. That conversion is very important for OpenAI to turn into a business to be able to raise more money. And Musk knew that a key Question in that debate is how much to value the nonprofit in exchange for them relinquishing control over this very valuable for profit subsidiary. So by making this bid, he's essentially saying, I think this is worth $97 billion. So he's telling the nonprofit board, whether you like it or not, you have to consider this bid. You have a duty to make sure that the nonprofit is adequately compensated for what they're giving up in this transition. And it's basically a huge wrench that he's throwing into these negotiations because there are all of these different stakeholders who are competing for a stake in the new for profit.

[Charlotte Gartenberg]

Okay, I want to rewind. These guys were once friends. They started OpenAI together in 2015. Let's go into this relationship and how it fell apart. WSJ talked to over a dozen people familiar with them. And with this relationship, how did Musk and Altman become friends?

[Berber Ginn]

You had to go back over a decade ago. Altman was introduced to Musk through a mutual contact. And that mutual contact helped arrange a trip for Altman to tour the SpaceX Fact in Southern California. And Altman has written about this experience. He was struck by the scale of Musk's ambition. And at the time, Altman was a young entrepreneur. He wasn't very well known in the Valley. And as Altman has done many times in his career, he sought after Musk to become his mentor of sorts. Shortly after, they co founded OpenAI in 2015. And at the time, Musk was very much the person in charge. He was supplying the bulk of the funding for the company. And so it started off as a very cordial relationship.

[Charlotte Gartenberg]

So it started off as cordial, but then things went south. How did Musk end up leaving OpenAI?

[Berber Ginn]

So there was a power struggle in 2017 and 2018 within the company. Musk essentially wanted more control over OpenAI. And there was a debate over who should essentially take charge of what had been a very decentralized organization that looked a lot more like a research lab than it did like a Silicon Valley startup. OpenAI and Musk actually very publicly disputed who's at fault, who did the wrong thing at the time. But if you zoom out, essentially Musk wanted more control and he wanted to become the de facto CEO of the company. People within OpenAI were hesitant towards that idea. And Altman was actually the one who, behind the scenes, rallied his other co founders to side with him and back his own bid to become CEO. So it was a very classic sort of power struggle between the two initial co founders and Altman won out.

[Charlotte Gartenberg]

Coming up, despite being the first buddy's nemesis, Altman still made it to the White House. How did he dodge Musk's relationship with the President? And what does the tech titan's trading of jabs mean for the AI industry? The fight continues after the break.

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[Charlotte Gartenberg]

OpenAI launched ChatGPT in November 2022. I remember Elon Musk raising a flag and saying that OpenAI was moving too fast. But then within a few months, Musk launched his own for profit open source artificial intelligence company, xai. How did that go?

[Berber Ginn]

So XAI is an interesting company. It was basically this startup that he bootstrapped from the ground up after seeing ChatGPT become super successful. And they kind of haven't really made a dent in the market yet. They've raised a lot of money, they've recruited a lot of promising engineers and scientists, but it really hasn't become a big player. They actually only very recently released their own standalone app. ChatGPT has hundreds of millions of users already. It's ubiquitous. People recognize the name. They did a Super bowl ad, but no one really knows what XAI is. You never want to count Musk out, and they've made a lot of progress on developing their own models, but if you zoom out, they're barely a nuisance.

[Charlotte Gartenberg]

Let's get into Stargate and how Sam Altman ended up in the White House. Firstly, Sam Altman is a lifelong Democrat, we reported. And second, Musk is what some people have labeled the first buddy. So how did Sam Altman kind of get around all that?

[Berber Ginn]

OpenAI had been working on Stargate for months. You could even argue years before Trump got elected last year. But after Trump's win, OpenAI made a decision to essentially announce this $500 billion initiative with the president. They wanted the President to be involved. OpenAI worked behind the scenes to put together the funding and the details behind Stargate so they could announce it with Trump in this sort of splashy announcement shortly after his inauguration. At the time, OpenAI didn't have very close ties with the Trump administration. Musk was living with Trump in Mar A Lago, and we've reported that he made his distaste of Altman very well known. Altman was Persona non grata in Mar a Lago to the point where a lot of Trump allies were even afraid to pass Altman's messages onto the president for fear of angering Musk.

[Charlotte Gartenberg]

How did Altman bring his Stargate partners on board, and how did this partnership help Altman gain access to President Trump?

[Berber Ginn]

There are two really important characters in the sort of Stargate drama. The first is Masayoshi's son, who is the CEO of the Japanese investment conglomerate SoftBank. Essentially, after the election, Altman realized that son not only had a lot of money, which you need for AI, but he had a relationship with President Trump and he was an important sort of ally, speaking on behalf of OpenAI and helping grease the wheels. And the second character here is Larry Ellison, the chairman of Oracle. And Oracle is also involved in Stargate. They're providing some of the equity funding and helping build the first data center project under Stargate. He's one of the biggest and most loyal Trump supporters, and he helped broker the call, actually, between Altman and Trump before the inauguration, where Altman discussed the Stargate project and pitched the president on the initiative.

[Charlotte Gartenberg]

Let's bring this back to Musk's $97.4 billion hostile bid for OpenAI. After he made the offer, Musk said he would retract it. On what condition?

[Berber Ginn]

So Musk said that he would retract the bid if OpenAI remained a nonprofit. And he knows that's not going to happen because he knows that Altman wants to turn OpenAI into a for profit company. The only way they'd be able to raise more money from investors is if they became a for profit company.

[Charlotte Gartenberg]

And how did the board respond to the bid?

[Berber Ginn]

The OpenAI board very quickly rejected Musk's bid. They said that the bid was not in the best interests of OpenAI's mission, which is to develop AI for the benefit of humanity.

[Charlotte Gartenberg]

Zooming out one more step. What's at stake here for the AI industry and what are the political stakes?

[Berber Ginn]

On the political side, it's almost who gets to set the AI agenda with President Trump. And the administration has a lot to offer. AI regulation is very important. But also with Trump setting up a sovereign wealth fund and the money that the government has, that's a really big prize for these companies as they try and raise billions of dollars to build data centers across the country. And so the political stakes are huge. And in terms of the stakes for the future of the AI industry, it's essentially who gets to get control of what everyone is going after, which is artificial general intelligence. This idea of building an AI model that's so powerful that it eclipses anything a human can do. That's the sort of legacy stamp that all of these tech billionaires want. And that's part of the reason why they're all fighting each other and trying to undermine each other, because they want a leg up in this extremely high stakes race to get to AGI before anyone else.

[Charlotte Gartenberg]

That was our reporter Berber Jin. And that's it for Tech News Briefing. Today's show was produced by Jess Jupiter. Hi, I'm your host, Charlotte Gartenberg. Additional support this week from Julie Chang, Jessica Fenton and Michael Ovalle wrote our theme music. Our supervising producer is Kathryn Millsop. Our development producer is Ayesha Al Muslim. Scott Salloway and Chris Zinsley are the deputy editors. And Falana Patterson is the Wall Street Journal's head of news audio. We'll be back this afternoon with TNB Tech Minute. Thanks for listening.

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