OpenAI co-founders vie to buy firm from Microsoft in bid backed by KKR and others

The fight for control of OpenAI has intensified with its co-founders, including Sam Altman, drumming up funding from investors including KKR for a rival bid to buy the artificial intelligence group from Microsoft Corp.<br><br>Altman and fellow co-founders Greg Brockman, Ilya Sutskever, and Wojciech Zaremba are working with bankers at Morgan Stanley on the possible counteroffer, according to people familiar with the matter. The effort remains in its early stages and faces significant hurdles, said the people, who asked not to be identified discussing private information.<br><br>The potential bid pits OpenAI’s co-founders against Microsoft, which is keen to maintain its hold on the startup. Microsoft has increased its stake in the company and installed its own executives on OpenAI’s board, fueling concerns that the AI pioneer is losing its independence.<br><br>KKR is among the investors that have expressed interest in backing a bid by the OpenAI co-founders, the people said. The New York-based private equity firm has a long track record of investing in technology companies, including GoDaddy and 1-800 Contacts.<br><br>Morgan Stanley has approached a number of potential bidders, including buyout firms and sovereign wealth funds, the people said.<br><br>OpenAI declined to comment, while Morgan Stanley and KKR didn’t immediately respond to requests for comment.<br><br>The showdown between the co-founders and Microsoft comes after the tech giant installed Kevin Scott, its chief technology officer, and Christopher Young, a former senior executive at Microsoft-owned LinkedIn Corp., on OpenAI’s board. The appointments were seen as a move to solidify Microsoft’s control and were opposed by some of the startup’s executives, who fear it may lose its independence as a result.<br><br>Altman, one of OpenAI’s top executives who was ousted and reinstated last year after a boardroom coup, is seeking a way to maintain the company’s autonomy while satisfying investor demands for a potential exit. The entrepreneur has consistently rejected calls to take the company public, and is wary of a full takeover by Microsoft.<br><br>OpenAI’s valuation has surged to more than $80 billion thanks to the viral success of its ChatGPT chatbot, which has become a global phenomenon. The startup’s financial performance has also improved dramatically, with Morgan Stanley analysts estimating its revenue may jump to $15 billion by 2028, making it one of the world’s fastest-growing companies.<br><br>Microsoft has already plowed $13 billion into OpenAI and has said it may invest a further $90 billion. The startup relies heavily on its backer for capital and computing power, which it uses to train its AI models.<br><br>The co-founders are expected to face significant hurdles in securing funding for a rival bid. Buyout firms are typically wary of backing management teams looking to buy out their companies, especially when those firms are owned by powerful corporate backers like Microsoft.<br><br>It’s also unclear how OpenAI’s board would react to a rival bid, given that it is controlled by Microsoft loyalists.<br><br>A successful buyout would require the backing of a broad coalition of investors, including buyout firms, sovereign wealth funds, and family offices. KKR’s potential backing represents a vote of confidence for the OpenAI co-founders, but much work remains to be done to build a robust investor syndicate.<br><br>The battle for OpenAI highlights the high stakes surrounding AI, which is being hailed as one of the most important technologies of the coming decades. Tech companies including Alphabet Inc.’s Google and Amazon.com Inc. are pouring tens of billions of dollars into AI startups, and competing fiercely to attract top talent.<br><br>The power struggle at OpenAI has also sparked concerns among employees about the impact of the company’s rapid commercialization on its research capabilities.<br><br>AI research has historically been a loss-making endeavor, with significant investments required to create and train models. The company’s growing commercial success has handed it a lucrative new revenue stream, but has also fueled demands for profits from investors.<br><br>Altman has consistently argued that OpenAI needs to remain independent to pursue its long-term mission of developing superintelligent AI that benefits humanity. He has said the company has no intention of prioritizing profits over research, a stance that has caused tension with some investors who are seeking an exit.<br><br>The entrepreneur’s vision for OpenAI’s future is still taking shape. The company is exploring ways to maintain its independence and autonomy while satisfying investors, including potentially spinning out its research arm into a new entity.<br><br>Morgan Stanley has been advising OpenAI on its strategic options for several months, and has also approached investors about potential funding for a rival bid.<br><br>The investment bank’s CEO, James Gorman, and Robert Kindler, vice chairman of investment banking and a key client relationship manager, are among the senior bankers involved in the effort.<br><br>Altman has told investors he is committed to maintaining OpenAI’s independence and is seeking ways to achieve that goal. It remains unclear how he plans to achieve that, given Microsoft’s significant stake in the company and its influence over OpenAI’s board.