Elon Musk hits back as Anthropic pledges 5% shares to public fund, says give them to people directly

Anthropic pledged 5% of its shares to a new public benefit fund, prompting Elon Musk to urge direct distribution. The exchange has fuelled debate over how AI companies should share their success.

AI startup Anthropic has announced a major move to give back to society. The company, known for its popular Claude AI models, is committing a portion of its shares to a newly created "Anthropic Public Benefit Fund". However, tech billionaire Elon Musk has a very different idea on how they should share their wealth.

Here is a simple breakdown of what Anthropic is doing and why Elon Musk is reacting to it.

The 5% promise

Anthropic will start by putting 5% of its shares into this new public benefit fund. The fund is a wholly-owned entity dedicated entirely to the public good.

But it does not stop there. The company says that for every 50% increase in its overall value (above a set baseline), they can add up to an extra 2% to the fund, subject to the board's discretion. Because of this unique structure, the bigger Anthropic gets, the more shares will be dedicated expressly to the public good.

A 20% commitment

When you add everything up, roughly 20% of Anthropic's shares are now tied to public benefit. This massive figure includes previous promises made by the team. Anthropic's co-founders have already pledged to donate 80% of their own equity. On top of that, about half of all Anthropic employees are also giving away a portion of their equity through a donation-matching program that has been running since the company was founded.

Anthropic noted that this is an alternative to standard tech industry practices. Usually, when a tech company grows, top executives just get bigger compensation awards. Anthropic is choosing to route that equity to the public benefit instead.

Elon Musk reacts

Never one to shy away from sharing his thoughts on rival AI companies, Elon Musk quickly responded to Anthropic's announcement.

Reacting to the news of the new fund, Musk said, "I recommend giving the shares directly to the public."

Instead of parking the shares in a fund managed by a board, Musk's suggestion would skip the middleman and put the ownership directly into the hands of regular people immediately. While Musk did not explain exactly how such a massive direct giveaway would work, his comment sparked a debate online about the best way for AI companies to share their success.

This major announcement comes right as Anthropic is preparing for a highly anticipated IPO (Initial Public Offering). For now, Anthropic's initial 5% share transfer still needs final approval from its stockholders.