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Home » Value And Reality Of Open AI
Innovation

Value And Reality Of Open AI

adminBy adminFebruary 11, 20251 ViewsNo Comments3 Mins Read
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Elon Musk’s $97.4 Billion Bid for OpenAI, and Sam Altman’s Response

Elon Musk and his investors have made a $97.4 billion offer to take over OpenAI. Sam Altman sent a quick rejection on X — he joked that he’d buy X (formerly Twitter) for $9.74 billion instead.

AI Hype is at Its Peak

Companies are now raising money based on hype alone, like Stargate, which announced debt funding before actually securing it. AI investments are reaching a new level of speculation.

Reality Check On OpenAI

In my eCornell certificate course on Designing and Building AI Solutions, we emphasize that AI is a tool. The real value is in value creation. As I often point out, back when OpenAI was purely a research initiative, it lacked a business moat and direct customer access — factors that would have kept me from investing.

Now, OpenAI has pivoted to a consumer-focused strategy, directly challenging Google’s market dominance. That’s where real value lies — but only if OpenAI executes effectively.

To win in the AI consumer race, they need data and customers. Altman often talked about AGI. More then once I called this just a “playbook for business leaders” as we don’t yet see any AGI in the near future. The AGI discussion — in my view — was just to position OpenAI as the leader in the AI space in general. However, DeepSeek’s emergence has challenged this very narrative, making OpenAI’s long-term success far from guaranteed.

Why Would Musk Buy OpenAI? Because he is Late!

Elon Musk has largely missed the AI train. His ventures in AI have lagged behind. Grok, his chatbot, has failed to gain traction. xAI, his OpenAi like compnay, has yet to deliver groundbreaking innovations. At one point, he even advocated for a pause in AI development. He said this is due to ethical concerns others assumed that he needs time to catch up. His stance on AI regulation has shifted particularly as his political influence grew. But that still does not mean Musk has a strong AI company. Therefore buying OpenAI could be his best bet, particularly as the U.S. government seeks a strong AI supplier.

Trump has signaled a desire to tighten AI access to maintain U.S. dominance, raising concerns in Europe and prompting a funding announcement from France today. Musk may hope that owning OpenAI could position him at the center of U.S. AI hegemony dreams. Maybe, but only if the U.S. approach plays out.

AI is Hard to Control

I’m skeptical. AI isn’t like nuclear energy. The U.S. approach to tighter controls may not be effective. The recent rise of DeepSeek has demonstrated that:

  • Open-source AI alternatives are advancing at an astonishing pace.
  • Trade barriers won’t stop AI proliferation.
  • Restrictive policies may push AI innovation outside the U.S.

If Musk were to acquire OpenAI, he might find himself with a bigger headache than Microsoft has had.

The End of a Love Affair between Microsoft and OpenAI

This bid could indicate that Microsoft and OpenAI’s partnership is nearing its end. I’ve long suspected that Microsoft might pivot away from OpenAI. Model commoditization and the trend toward more cost-effective inference suggest that Microsoft’s long-term AI focus will shift — similar to Amazon’s — toward AI applications rather than frontier development.

Perhaps this bid is a sign that Microsoft is looking to offload OpenAI. The AI chessboard is shifting fast. Let’s see how this plays out.

Let’s see what happens. AI’s future is changing fast.

Read the full article here

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