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OpenAI accuses Musk of hypocrisy

Elon Musk’s $97.4 billion bid to acquire OpenAI’s assets has sparked controversy, with OpenAI accusing him of contradicting his own legal claims.

Musk’s lawsuit, filed in August, argues that OpenAI’s assets should remain in a charitable trust and not be transferred for private gain. OpenAI has called his offer ‘an improper bid to undermine a competitor’.

The dispute comes as OpenAI seeks to transition into a for-profit organisation to secure funds for advanced AI development. Musk, a co-founder of OpenAI who left before ChatGPT’s rise in 2022, has launched his own AI startup, xAI, in 2023.

OpenAI’s letter to a federal court highlights the clash between Musk’s stated opposition to privatising its assets and his attempt to acquire them with private investors. The AI company argues that Musk’s bid undermines his legal position and the nonprofit’s mission.

Representatives for Musk have yet to comment. OpenAI continues to defend its transition plan, emphasising the need for substantial investment to remain competitive in the fast-evolving AI landscape.

For more information on these topics, visit diplomacy.edu.

Musk claims Grok 3 outperforms rivals

Elon Musk announced on Thursday that his AI chatbot, Grok 3, is nearing completion and will be released in the next week or two. In a video call at the World Governments Summit in Dubai, Musk stated that Grok 3 exhibits powerful reasoning capabilities, outperforming other AI models in tests conducted so far. This new AI is being developed through Musk’s company, xAI, which he founded to rival OpenAI and Google.

Musk, also a co-founder of OpenAI, has been outspoken in his criticism of the AI startup. Recently, a consortium led by Musk made a $97.4 billion offer to acquire OpenAI’s nonprofit assets, a move that comes amid Musk’s ongoing legal battle with OpenAI. He is challenging the company’s decision to transition to a for-profit model, arguing that it undermines its original nonprofit mission.

In addition to discussing AI, Musk shared his thoughts on reducing US government spending, suggesting that $1 trillion could be saved by cutting inefficiencies. He also spoke on international matters, advising the US to be less involved in other countries’ affairs. Musk’s comments followed a partnership announcement with UAE AI Minister Omar Al Olama on a futuristic underground transport system called the “Dubai Loop.”

Musk’s remarks at the summit highlighted his wide-ranging influence, not only in technology but also in global political and economic discussions.

For more information on these topics, visit diplomacy.edu.

Baidu to launch Ernie 5 AI in 2025

Baidu, China’s tech giant, is set to unveil the next version of its AI model, Ernie 5, in the second half of 2025. This new iteration will introduce multimodal capabilities, allowing it to process and convert a variety of formats such as text, video, images, and audio, offering significant advancements in AI technology.

The release is timed to respond to increasing competition in China’s rapidly developing AI sector, particularly from the startup DeepSeek. The company has gained attention with a reasoning model that rivals OpenAI’s GPT while offering lower costs. Despite being one of the first to enter the AI space in China after the debut of ChatGPT in 2022, Baidu has faced challenges in gaining widespread adoption of its Ernie model.

Baidu’s AI offerings have struggled to keep pace with competitors like ByteDance’s Doubao chatbot and DeepSeek in terms of user uptake. The company maintains that its latest version, Ernie 4, is comparable to OpenAI’s GPT-4, but the adoption rate has been slower than anticipated. CEO Robin Li acknowledged the unpredictable nature of innovation, noting DeepSeek’s rise as a reminder that the future of AI is uncertain and can emerge from unexpected places.

Li also stressed the importance of continued investment in data centres and cloud infrastructure to keep up with the evolving demands of AI, even as newer models, such as DeepSeek’s, challenge the cost-efficiency of large AI models.

For more information on these topics, visit diplomacy.edu.

Positron raises millions to challenge Nvidia in AI chips

AI chip startup Positron has raised $23.5 million in a bid to compete with industry leader Nvidia. The Reno-based company, which manufactures its chips in Arizona, claims its processors consume less than a third of the power of Nvidia’s high-performance H100 chips while maintaining similar capabilities. Investors in the funding round included Valor Equity Partners, Atreides Management, and Flume Ventures.

Positron’s chips are designed for AI inference, the stage where trained AI models are used rather than developed. While demand is currently higher for training chips, analysts predict that inference chips could soon become the more sought-after option as AI applications expand. This shift has led major players such as OpenAI, Google, and Meta to invest heavily in AI infrastructure, with spending expected to reach tens of billions of dollars this year.

Although Nvidia dominates roughly 80% of the AI chip market, rising costs and concerns over reliance on a single supplier have pushed major tech firms to seek alternatives. With its latest funding, Positron positions itself as a strong contender in the growing US and global AI chip industry, offering a more energy-efficient option for future AI applications.

For more information on these topics, visit diplomacy.edu

Musk bids $97.4 billion-dollar to reclaim control over OpenAI

Elon Musk has reignited his rivalry with OpenAI by leading a consortium in a staggering $97.4 billion bid to acquire the nonprofit that governs the ChatGPT creator. The move is the latest chapter in Musk’s long-running battle with OpenAI CEO Sam Altman, who swiftly dismissed the offer with a sarcastic post on X, suggesting he would buy Musk’s platform for $9.74 billion instead. The dramatic exchange highlights the growing tensions surrounding OpenAI’s controversial shift from a nonprofit to a for-profit entity, a transition that Musk has legally challenged, claiming it betrays the company’s original mission of prioritising AI safety over profit.

Musk co-founded OpenAI with Altman in 2015, envisioning an organisation dedicated to open-source AI research for the benefit of humanity. However, he parted ways with the company before it became a dominant force in generative AI. Since then, Musk has launched his own AI venture, xAI, which recently secured $6 billion in funding at a $40 billion valuation. His latest bid to acquire OpenAI comes when the company is seeking new investments to fuel its growth, with reports suggesting that SoftBank is in talks to lead a funding round that would push OpenAI’s valuation to an eye-watering $300 billion.

Musk’s legal battle with OpenAI hinges on the argument that the organisation’s leaders, including Altman, have violated their original agreement by prioritising commercial interests over AI safety and transparency. His lawsuit seeks to block OpenAI’s shift to a for-profit structure, and now, his surprise takeover bid could throw a major obstacle in the company’s fundraising efforts. The consortium backing Musk’s offer includes Baron Capital Group and Emanuel Capital, signalling that serious financial players support the bid. Analysts suggest that OpenAI’s board has a fiduciary duty to consider the offer, given its substantial valuation and potential legal complications.

Financing such a deal would require Musk to tap into his vast wealth, with options including selling Tesla stock, leveraging assets from SpaceX, or securing loans against his holdings. However, his financial leverage is likely constrained after his $44 billion acquisition of X (formerly Twitter), and securing additional funding for such a massive bid could prove challenging. Meanwhile, OpenAI, currently valued at $157 billion, remains in talks with investors for its expansion, and any disruption caused by Musk’s move could impact its ability to raise funds on favourable terms.

Why does it matter?

Legal experts and industry analysts view Musk’s bid as a significant disruption to OpenAI’s trajectory. Jonathan Macey, a corporate governance professor at Yale Law School, noted that the nonprofit’s board is now in a difficult position, as rejecting a higher offer in favour of a different funding strategy could raise concerns about whether the board is acting in the best interest of OpenAI’s original mission. Furthermore, Musk’s criticism of OpenAI’s partnership with Microsoft, a key investor in the company, adds another layer of complexity to the situation, as Microsoft remains a powerful force in shaping OpenAI’s future direction.

If Musk’s plan succeeds, he could steer OpenAI back toward an open-source, safety-focused model, aligning with his publicly stated goals of ensuring AI development remains transparent and ethical. However, if OpenAI resists, it could face prolonged legal battles and financial uncertainties that might slow its rapid expansion. Either way, Musk’s aggressive push to reclaim influence over OpenAI could reshape the company’s approach and future business plans.

OpenAI’s Stargate project eyes US data centre locations

OpenAI announced on Thursday that it is evaluating US states as potential locations for data centres supporting its ambitious Stargate project, which aims to secure the US’s lead in the global AI race. The project is seen as crucial for ensuring that AI development remains democratic and open, rather than falling under authoritarian control, according to Chris Lehane, OpenAI’s chief global affairs officer.

Stargate, a venture backed by SoftBank, OpenAI, Oracle, and other investors, is set to receive up to $500 billion for AI infrastructure. A significant portion of this investment, $100 billion, will be deployed immediately, with the rest scheduled over the next few years. Texas has been designated as the flagship location for Stargate’s data centres. An initial site under construction in Abilene is expected to begin operations later this year.

The announcement follows the rise of DeepSeek, a Chinese AI model that challenges the traditional view that AI development requires large, specialised data centres. DeepSeek’s use of cheaper chips has raised concerns among investors, leading to a significant drop in tech stock values, including a record $593 billion loss for Nvidia, the leading AI chipmaker.

OpenAI is considering data centre locations in approximately 16 states, with plans to expand the Stargate network to five to ten campuses in the coming months.

DW Newsletter # 198 – DeepSeek, a new contender in the AI arena

Dear readers,

When DeepSeek first emerged in late 2023, it seemed like another ambitious startup in the crowded AI landscape. Founded by Chinese hedge fund manager Liang Wenfeng, DeepSeek began with modest attention, releasing AI models that showed promise but were overshadowed by industry giants like OpenAI, Meta, and Google. However, in December 2024, the company catapulted into the global spotlight with the launch of DeepSeek R1, an AI model that shook the foundations of the tech world. This development was not just a technological marvel but a geopolitical wake-up call.

DeepSeek R1 stunned the industry with its ability to rival the capabilities of market leaders, achieving near-parity with models like GPT-4 and Gemini. What set it apart, however, was its shockingly low cost. While US companies like Meta and OpenAI pour billions into AI research and infrastructure, DeepSeek reportedly developed its model for just $5.6 million, leveraging less advanced chips that bypassed US export restrictions. The revelation underscored a significant shift in the AI arms race: resourcefulness could rival raw financial power. The app quickly became the most downloaded on Apple’s App Store, disrupting markets and causing US tech stocks to shed nearly $1 trillion in value within days.

The conversation shifted to national security as the US government scrambled to respond. DeepSeek’s emergence directly challenged US dominance in AI and called into question the effectiveness of export restrictions imposed by the Biden administration. Returning for his second term, President Donald Trump convened a high-stakes meeting with Nvidia CEO Jensen Huang to discuss tightening chip export policies. Nvidia, whose shares dropped 17% after DeepSeek’s success, found itself at the centre of the geopolitical battle, with its cutting-edge AI chips both coveted and restricted.

The Trump administration is now contemplating additional measures to curb China’s access to advanced technology, including halting Nvidia’s H20 chip exports, initially designed to comply with export controls. Lawmakers from both parties are urging a thorough review of US export policies in light of DeepSeek’s achievements. Reports have even suggested that DeepSeek may have illegally obtained US-restricted chips, prompting investigations by the Commerce Department.

For its part, DeepSeek has embraced the controversy. Liang Wenfeng has framed the company’s success as a triumph of innovation over-dependence on Western technology. However, questions about the company’s transparency linger. Critics argue that DeepSeek’s low-cost claims omit the broader expenses of research and development, while concerns about its alignment with the Chinese government’s strategic goals have fueled scepticism in the West. The fact that DeepSeek’s earlier models censored politically sensitive content only deepens fears about its role in state-led narratives.

DeepSeek’s rise has challenged assumptions about the cost and accessibility of cutting-edge technology, prompting both excitement and unease. While the US tightens its policies and grapples with its response, DeepSeek’s trajectory is proof that the race for AI dominance is no longer confined to Silicon Valley; it’s now a high-stakes game of global power and influence.

Trump and Nvidia CEO met to discuss DeepSeek and AI chip export

US President Donald Trump and Nvidia CEO Jensen Huang discussed the challenges posed by China’s advancements in AI, particularly focusing on the impact of Chinese AI company DeepSeek.

Stay updated on DeepSeek developments!

In other news..

DeepSeek sparks AI investment surge in China

Chinese investors are flocking to AI-related stocks, betting that the success of home-grown startup DeepSeek will propel China to the forefront of the AI race amid the escalating Sino-US technology conflict.

Security concerns lead to Australian ban on DeepSeek

Concern over potential security threats has prompted Australia to ban Chinese AI startup DeepSeek from all government devices, joining a growing list of nations restricting its use.

Read the insightful dig.watch analysis of the rise of DeepSeek and its global shockwaves!

Other topics and updates

Visit dig.watch now for the latest updates and other topics!

Marko and the Digital Watch team

Highlights from the week of 31-07 February 2025

eu flags in front of european commission

EU supports OpenEuroLLM for open-source AI innovation

An LLM project to enhance multilingual AI accessibility.

US lawmakers form working group to shape crypto policy

Lawmakers aim to clarify cryptocurrency regulations as the industry continues to expand.

Chinese firms embrace DeepSeek AI Models

Domestic technological innovation amid global competition.

flag of usa and china on cracked concrete wall background

China targets US companies with new tariffs

The trade war is raging on through retaliatory measures targeting major businesses.

ai brain intelligent ai technology digital graphic design electronics ai machine learning robot human brain science artificial intelligence technology innovation futuristic

Global leaders gather in Paris to discuss AI development

Global collaboration on sustainable and inclusive AI development amid geopolitical tensions.

Salesforce cuts jobs while expanding AI workforce

Affected employees can apply for other roles, though the company has not specified which divisions will see the biggest cuts.

Trump delays enforcement of TikTok sale deadline

The app’s future in the US remains uncertain.

AI unlocks secrets of 2,000-year-old Herculaneum scroll

Hidden text unveiled with AI and X-ray tech.

EU plans stricter rules for online platforms selling goods

These changes could have significant financial and operational implications for the e-commerce companies involved.

Israeli spyware firm Paragon accused of hacking WhatsApp users

A recent investigation has revealed that dozens of WhatsApp users across the globe were targeted by advanced spyware designed to infiltrate their devices without any action on their part.

DeepSeek AI gains popularity in China

The app sparks national pride and curiosity in the country.

View all updates

Reading corner

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How Gen Z took us by surprise: The unexpected journey of Serbian students – Diplo

Imagine 100,000 people standing in utmost silence for 15 minutes, with their phone flashlights pointed at the sky. They pay tribute to the 15 innocent people who died under the rubble of the collapsed, newly reconstructed eave of the railway station in the city of Novi Sad, Serbia. 100,000 students and supporting citizens, standing still and united in palpable silence, in Belgrade, the capital of Serbia. Those present witnessed a moment that sent a chill up their spine.

dig.watch

Legacy media vs social media and alternative media channels

In this digitally porous media world, information spreads faster than ever, empowering creativity but also unleashing avalanches of misinformation and deepfakes that blur reality. High-profile clashes, from Novak Djokovic boycotting…

www.diplomacy.edu

Who funds the UN? Budget contributions & power in multilateralism | Part 2 – Diplo

Part 2 examines the UN’s funding paradox: 128 nations contributing 2.2% of the budget can outvote major donors. Can China replace US leadership? Is Security Council reform urgent? Explore power shifts, moral authority, and the future of multilateralism.

BLOG DeepSeek some trade related aspects of the breakthrough

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DeepSeek: Some trade-related aspects of the breakthrough – Diplo

DeepSeek’s open-source approach promotes accountability and allows developing countries to leverage AI solutions, potentially levelling the playing field. The shift towards open-source models may also encourage smaller players to create tailored AI systems, fostering a collaborative environment rather than a competitive race. Consequently, trade and technological diffusion can significantly enhance global economic growth and innovation.

www.diplomacy.edu

Overcoming overconsumption: Lessons from Wikipedia – Diplo

What if we could overcome overconsumption? Could Wikipedia’s approach of respect and collaboration offer a solution? Aldo Matteucci writes.

OpenAI co-founder John Schulman leaves Anthropic

John Schulman, a co-founder of OpenAI, has stepped down from his role at Anthropic, the AI startup confirmed on Wednesday. Schulman had joined Anthropic last year after leaving OpenAI in August, aiming to focus on AI alignment and return to hands-on technical work. Anthropic’s chief science officer, Jared Kaplan, expressed regret over his departure but wished him well in his future endeavours.

Anthropic has grown into a key competitor in the AI foundation model space, with annualised revenue reaching approximately $875 million. The company provides access to its AI models both directly and through third-party cloud services such as Amazon Web Services. Schulman’s departure was first reported by The Information.

The move marks another shift in the AI industry as competition intensifies among leading companies. OpenAI, Anthropic, and other key players continue to race towards advancing AI capabilities while addressing concerns around safety and alignment.

US AI Safety Institute director steps down amid uncertainty

Elizabeth Kelly, the inaugural director of the United States AI Safety Institute, has stepped down from her role after a year overseeing efforts to measure and counter risks from advanced AI systems. During her tenure, the institute reached agreements with OpenAI and Anthropic to test their models before release and collaborated with global AI safety organisations.

The institute, created under former President Joe Biden’s administration, operates within the US Commerce Department‘s National Institute of Standards and Technology. Since taking office, President Donald Trump has revoked Biden’s 2023 executive order on AI, raising questions about the institute’s future direction under the new administration.

Kelly did not comment further on her departure but expressed optimism in a LinkedIn post, stating that the institute’s mission remains crucial to the future of AI innovation. The White House has yet to clarify its plans for AI regulation and safety oversight.

AI giant OpenAI to debut Super Bowl commercial

OpenAI is set to air its first-ever television advert during the upcoming Super Bowl, marking its entry into commercial advertising. The Wall Street Journal reported that the AI company will join other major tech firms in leveraging the massive Super Bowl audience to promote its brand. Google previously used the event to highlight its AI capabilities.

The Super Bowl is one of the most sought-after advertising platforms, with high costs reflecting its enormous reach. A 30-second slot for the 2025 game has sold for up to $8 million, an increase from $7 million last year.

The 2024 Super Bowl attracted an estimated 210 million viewers, and this year’s event will take place in New Orleans on 9 February at the Caesars Superdome.

OpenAI has seen rapid growth since launching ChatGPT in 2022, reaching over 300 million weekly active users. The company is in talks to raise up to $40 billion at a $300 billion valuation and recently appointed Kate Rouch as its first chief marketing officer. Microsoft holds a significant stake in the AI firm.