Musk tried to fold OpenAI into Tesla before his 2018 exit

OpenAI was nearly swallowed by Tesla before it ever built ChatGPT.

Time published an excerpt from Walter Isaacson's upcoming biography of Elon Musk, uncovering the dramatic rift behind the scenes. According to the book, before parting ways with OpenAI in 2018, Musk tried to convince Sam Altman to fold the entire research lab into Tesla.

The OpenAI team flatly rejected the idea. Following the showdown, Altman took over as president, set up a capped-profit arm, and secured billions from Microsoft. The rest is modern tech history.

From saving humanity to closet negotiations

Musk's obsession with AI started back in 2012 when he met DeepMind co-founder Demis Hassabis. In a SpaceX canteen, Hassabis pointed out that superintelligent machines could easily discard humanity. Musk processed the warning and promptly wrote a $5 million check to DeepMind, mainly to keep an eye on what they were building.

That concern soon led to late-night clashes with Google co-founder Larry Page. During a birthday debate in 2013, Page dismissed Musk's worries as sentimental nonsense, arguing that machine consciousness is merely the next phase of evolution and labeling Musk a "specist." Musk's blunt response: "Well, yes, I am pro-human. I f-cking like humanity, dude."

When Google moved to acquire DeepMind in late 2013, Musk even took an hour-long Skype call with Hassabis from an upstairs closet at a party to stop the buyout. It failed, and Google closed the deal in January 2014.

Frustrated by Google's dominance and finding no regulatory traction after pitching President Obama in 2015, Musk turned to Sam Altman. Over dinner in Palo Alto, they plotted a nonprofit lab named OpenAI. The goal was to build a "Linux version of AI" that stayed open-source to prevent any single corporation from controlling the future.

The fallout and xAI

That vision fractured in 2018 as Tesla expanded its own internal AI pipeline. Believing OpenAI was falling behind, Musk pushed to absorb the lab into Tesla. When Altman and the team pushed back, Musk walked away.

To survive without Musk's wealth, Altman established a commercial arm and took massive backing from Microsoft. When OpenAI dropped ChatGPT late last year, it ignited an all-out arms race among tech giants, sending Microsoft doubling down and Google scrambling to release Bard.

The excerpt notes that Musk resented being left out of the fray once generative AI took off. He publicly attacked OpenAI for straying from its open-source roots, signed an open letter calling for a six-month moratorium on advanced AI, and in July launched xAI with the lofty goal of understanding the true nature of the universe.

Why it matters

This excerpt highlights how much of the current AI boom stems from a clash of billionaire egos and conflicting philosophies.

In our view, OpenAI's refusal to be absorbed by Tesla was the defining pivot point. If Musk had won that dispute, OpenAI would likely have been retooled to service Tesla's self-driving sensors and robotics, meaning ChatGPT as a broad consumer product might never have existed. Yet to break free from Musk, OpenAI had to abandon pure idealism and marry Microsoft's balance sheet instead.

For the broader industry, it shows the sheer economic reality of frontier AI. Musk intended OpenAI to be an open-source counterweight to Big Tech monopolies. Instead, training modern foundation models proved so capital-intensive that Altman had no choice but to build another corporate powerhouse.

Now, with xAI, Musk is back in the arena he helped construct. But having lost the open-source laboratory he founded, he is forced to fight an uphill battle against the very empire he pushed Altman to build.