Nadella Testifies Musk Never Flagged Concerns Over Microsoft’s OpenAI Deals
CNBC reported Monday that Microsoft CEO Satya Nadella wrapped up his testimony in the Musk v. Altman federal trial, telling the court that Elon Musk had never reached out to him about the Microsoft OpenAI investment or expressed any concern it crossed legal or ethical lines.
Nadella Takes the Stand in Oakland
Nadella testified for several hours at the federal courthouse in Oakland, California. Questioning covered Microsoft’s early strategic partnership with OpenAI, his personal understanding of that relationship, and the turbulent period when CEO Sam Altman was briefly removed from the company’s top job. Nadella described Microsoft’s decision to back OpenAI as a calculated commercial risk taken when few other investors were willing to commit capital to the then-obscure research lab. He was clear that the investments were never considered donations, and that commercial upside was baked into the arrangement from day one. Microsoft, he said, offered OpenAI steep discounts on computing infrastructure and expected marketing and revenue benefits in return.
The $13 Billion Question
Microsoft’s cumulative investment in OpenAI has become a focal point of the trial. A 2019 initial stake of $1 billion was followed by a $2 billion contribution in 2021 and a further $10 billion in 2023, bringing the total past $13 billion. A video deposition from a Microsoft corporate development executive played in court revealed the company has recorded roughly $9.5 billion in revenue through the OpenAI partnership to date. Musk, who gave his own testimony late last month, singled out the $10 billion tranche as the moment he concluded OpenAI had abandoned its nonprofit roots. He told the court he believed the organisation was effectively misappropriating charitable assets.
Background: A Founding Dispute Years in the Making
Musk co-founded OpenAI alongside Altman and others in 2015, but departed the board in 2018 following disputes over strategy, including a push to fold the lab into his electric vehicle company. OpenAI subsequently created a for-profit subsidiary, unlocking the large-scale external funding that has since pushed its valuation above $850 billion. Musk launched rival AI startup xAI and has since merged it with SpaceX. His 2024 lawsuit names Microsoft as a defendant, alleging the company aided OpenAI in breaching its founding charitable mission. Microsoft has denied that framing, and Nadella’s testimony reinforced the company’s position that its involvement was always a straightforward commercial partnership.
What Comes Next
The trial continues in Oakland as both sides present witness testimony and depositions. The outcome could have significant implications for how AI companies structure their relationships with for-profit investors going forward.
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