Cage match on hold: For once, Musk and Zuckerberg are on the same side of a fight

In June 2023, Elon Musk tweeted that he was “up for a cage match” with Mark Zuckerberg, and Zuck accepted the challenge, posting “send me location” in an Instagram story.

A year and a half later, while the two billionaires still haven’t fought in the octagon, they have formed an unlikely alliance against a common competitor: OpenAI. Over the weekend, The Wall Street Journal reported that Meta is urging California’s attorney general to block OpenAI’s conversion to a for-profit entity, following in Tesla CEO Musk’s footsteps. Musk, an OpenAI founder, previously sued OpenAI for bailing on its nonprofit mission, though OpenAI posted a lengthy statement last week saying Musk wanted OpenAI to be for-profit from the start.

The Journal reported that Meta said in a letter to AG Rob Bonta that allowing OpenAI to become a for-profit company would set a dangerous precedent by letting the “non-profit” investors benefit from tax write-offs until the company was ready to go public:

“If OpenAI’s new business model is valid, non-profit investors would get the same for-profit upside as those who invest the conventional way in for-profit companies while also benefiting from tax write-offs bestowed by the government.”

Of course beyond the skewed incentive structure that might be encouraged by allowing a nonprofit to convert to a for-profit, Meta has another reason for wanting this deal blocked: OpenAI is one of its biggest AI competitors. Meta has led the charge with open-sourcing AI through its Llama models. Meanwhile, Musk’s xAI has raised $12 billion to buy GPUs and compete with OpenAI as well.

OpenAI raised $6.6 billion in October, valuing the company at $157 billion, but this fundraise was contingent on the company converting to a for-profit entity. California blocking this move would be a huge blow to the ChatGPT creator and benefit Zuckerberg and Musk’s AI ambitions.