Elon Musk, OpenAI's Sam Altman clash over USD 500 billion AI project: What is it and why are tech titans fighting?

Elon Musk is clashing with OpenAI CEO Sam Altman over the Stargate artificial intelligence infrastructure project touted by President Donald Trump, the latest in a feud between the two tech billionaires that started on OpenAI's board and is now testing Musk's influence with the new president.

Trump on Tuesday had talked up a joint venture investing up to $500 billion through a new partnership formed by OpenAI, the maker of ChatGPT, alongside Oracle and SoftBank.

The new entity, Stargate, is already starting to build out data centres and the electricity generation needed for the further development of fast-evolving AI technology.

Trump declared it “a resounding declaration of confidence in America's potential” under his new administration, with an initial private investment of $100 billion that could reach five times that sum.

But Musk, a close Trump adviser who helped bankroll his campaign and now leads a government cost-cutting initiative, questioned the value of the investment hours later.

“They don't actually have the money,” Musk wrote on his social platform X. “SoftBank has well under $10B secured. I have that on good authority.” Altman responded Wednesday to say Musk was “wrong, as you surely know” and inviting Musk to come visit the first site in Texas that is already under construction.

"(T)his is great for the country. I realize what is great for the country isn't always what's optimal for your companies, but in your new role i hope you'll mostly put (America) first,” Altman wrote, using a US flag emoji to represent America.

Behind the feud

The public clash over Stargate is part of a years-long dispute between Musk and Altman that began with a boardroom rivalry over who should run OpenAI, which both men helped found.

Musk, an early OpenAI investor and board member, sued the artificial intelligence company last year alleging it had betrayed its founding aims as a nonprofit research lab benefiting the public good rather than pursuing profits.

Musk has since escalated the dispute, adding new claims and asking for a court order that would stop OpenAI's plans to convert itself into a for-profit business more fully. A hearing is set for February in a California federal court.

The world's richest man, whose companies include Tesla, SpaceX and X, last year started his own rival AI company, xAI, that is building its own big data center in Memphis, Tennessee. Musk says it faces unfair competition from OpenAI and its close business partner Microsoft, which has supplied the huge computing resources needed to build AI systems such as ChatGPT.

When did Stargate start?

Tech news outlet The Information first reported on an OpenAI data center project called Stargate in March 2024, indicating that it's been in the works long before Trump announced it.

Another company — Crusoe Energy Systems — announced in July it was building a large and “specially designed AI data center” at the northwest edge of Abilene, Texas at a site run by energy technology company Lancium. Crusoe and Lancium said in a joint statement at the time that the project was “supported by a multibillion-dollar investment” but didn't disclose its backers.

AI technology requires huge amounts of electricity to build and operate and both companies said the project would be powered with renewable sources such as nearby solar farms, in a way that Lancium CEO Michael McNamara said would “deliver the maximum amount of green energy at the lowest possible cost.” Crusoe said it would own and develop the facility.

It's not clear how and when that project became the first phase of the Stargate investment revealed by Trump. Abilene Mayor Weldon Hurt said construction began about nine months ago but “we didn't know it was going to be quite this big.

We thought it was going to be about a third of this size.” Oracle co-founder Larry Ellison said Tuesday that the Abilene project is the first of about 10 data centre buildings currently being built and that number could expand to 20.

Hurt told The Associated Press that the region surrounding Abilene, a city of about 130,000 people, benefits from a wealth of energy sources, including oil, gas, solar and some of the “largest wind farms in the world,” though Trump signaled opposition to wind power this week by temporarily halting approval of wind projects on federal lands.

“We have the capability to produce the energy for this market so it really means a lot for a town like Abilene,” Hurt said. “To have this opportunity here in west-central Texas, to have something like this to make Abilene substantial, we're just excited about it.” Where is Microsoft?

Missing from Trump's press conference Tuesday was Microsoft, which has long supported OpenAI with billions of dollars in investments and enabling its data centers to be used to build the models behind ChatGPT and other generative AI tools.

Microsoft is also a technology partner in the Stargate project, along with chipmakers Nvidia and Arm, but put out a statement noting that its OpenAI partnership will “evolve” in a way that enables OpenAI “to build additional capacity, primarily for research and training of models.” Asked about Musk's comments about the Stargate deal Wednesday during a CNBC interview at the World Economic Forum in Davos, Switzerland, Microsoft CEO Satya Nadella pivoted to his company's own $80 billion plan to build out its global AI infrastructure, of which $50 billion is being spent in the US.

(Except for the headline, this story has not been edited by DNA staff and is published from AP/PTI)