TL; DR
Satya Nadella testified in Musk’s lawsuit against Altman that he feared Microsoft would become “the next IBM,” and revealed that the $13 billion OpenAI investment was not a commitment to the nonprofit’s mission, but a survival bet backed by a $92 billion revenue forecast.
Satya Nadella a federal grand jury Monday He feared that Microsoft would.the next IBM“OpenAI is the next Microsoft. An April 2022 admission from an internal email released by Elon Musk’s lead attorney reveals the strategic concern that led to the largest corporate investment in AI history. Microsoft didn’t invest $13 billion in OpenAI because it believed in its non-profit mission, because OCE invested in advancing its humanitarian mission. Without it, it believed the company would be irrelevant.
A January 2023 memo to the jury that Microsoft president Brad Smith presented to the company’s board predicted $92 billion in revenue from that cumulative investment, with an annual escalator of 20 percent starting in 2025. The document traces the Microsoft-OpenAI partnership from a technology collaboration to the world’s biggest financial history: ‘A valuable software company that can’t survive on its own in the age of artificial intelligence.’
The IBM analogy is not accidental. In the 1980s, IBM developed the personal computer and outsourced its operating system to a small software company in Redmond, Washington. This decision did not accept Microsoft and IBM. Nadella told his team that the same dynamic is taking shape in artificial intelligence. OpenAI was building a reasoning engine. Microsoft was creating cloud infrastructure. If OpenAI became a platform and Microsoft became a commodity, the company that defined enterprise software for four decades would sink into the same irrelevance as the company that defined enterprise hardware for three.
Musk’s lawyers presented the email, suggesting that Microsoft’s investment was for-profit from the start, undermining OpenAI’s nonprofit origins. Nadella’s response was to argue that the partnership was mutually beneficial. But the email speaks for itself. The CEO of Microsoft did not write about the development of artificial intelligence security. He wrote about survival.
Return
Brad Smith’s $92 billion forecast landed on Microsoft’s board a month before the company publicly announced a $10 billion investment in OpenAI. The note includes a 20 percent annual escalator starting in 2025, meaning the projected revenue will grow further as OpenAI models become more commercially valuable. At the time, ChatGPT had been open for less than two months.
The financial account was simple. Microsoft was the exclusive cloud provider for OpenAI models and had exclusive commercial rights to resell them through Azure. Every dollar of OpenAI revenue went through Microsoft infrastructure. $13 billion was donated to non-profit organizations. It was the down payment on the distribution monopoly for the decade’s most important technology.
OpenAI is now valued at $852 billion. Microsoft owns 27 percent of the commercial entity resulting from the conversion in October 2025. The non-profit foundation, which is supposed to manage the technology, holds 26 percent. The match between mission and money promised by the founders of OpenAI has been replaced by a cap table.
Blind spots
On cross-examination, Nadella admitted that he had no knowledge of full-time employees at the OpenAI nonprofit prior to March 2026. He could not identify any grants, research or open-source technology produced by the nonprofit. He was not informed in advance that the board planned to fire Sam Altman in November 2023. He was never told why Altman was fired.
The admissions paint a portrait of a partnership where the investor knows everything about the commercial operation and nothing about the nonprofit management. Musk’s legal team wants jurors to conclude that the nonprofit is a shell. Nadella’s statement does not contradict this framework. This strengthens it in terms of the highest earning company on the commercial side.
Witnesses
For three weeks, the court collected testimony that dismantled the motives of each participant. Greg Brockman, co-founder and president of OpenAI, disputed Musk’s account of the startup’s early days, saying Musk’s OpenAI employees were secretly working on self-driving technology at Tesla. Submitted as evidence were entries in Brockman’s own journals calling the nonprofit’s mission a “lie.”undermining both Musk’s claim of mission sanctity and OpenAI’s claim that it is protected.
Former board members Helen Toner and Natasha McCauley testified that Altman was unreliable, withheld information from the board and sometimes lied. McCauley told the jury that “buckets of worry” Altman’s leadership, including one incident in which Altman claimed OpenAI’s legal department cleared the GPT-4 Turbo release in India without security board review.
Admissions
Musk took the stand during the first week of the trial, telling jurors that OpenAI leaders had tricked him into funding the company. He repeated a sentence that became the refrain of the court: “You can’t just steal a charity.“He claimed he was not opposed to a small commercial arm funding the non-profit organization, but he lost faith in Altman when he learned of Microsoft’s $10 billion investment by texting Altman in late 2022: “What’s going on? It’s a bait and switch.“
Then came the question of distillation. Asked whether XAI used OpenAI models to train Grok, Musk said it was common industry practice. When asked if that meant yes, he replied, “Partly.” His own AI company’s admission that it copied technology it claims was stolen from a charity caused an uproar in the courtroom. Musk told the jury that the case would set a precedent to “loot every charity in America.” at the same time, he admitted that he used the charity’s product to create a competitor.
Shivonne Zilis, a former OpenAI board member and the mother of Musk’s four children, testified that Musk tried to hire Altman to lead a new artificial intelligence lab at Tesla. Altman was offered a seat on Tesla’s board. He asked Andrej Karpathy to send a list of top OpenAI researchers to poach. The person suing the charity for breach of trust was actively seeking to deprive the charity of leadership and talent, according to its own witness.
Defense
Altman took the stand Monday. He noted that Musk left the OpenAI board in 2018 “spiritual growth” for some employees because Musk had become demotivated by listing the achievements of key researchers.Altman told the jury that Musk left because he lost faith in the project and wanted long-term control that the other founders would not give him.
During a tense exchange, Musk’s attorney confronted Altman with a February 18, 2023, text message Musk sent: “I am so grateful for all you have done to help. I don’t think OpenAI would have happened without you.” The result was that Altman publicly downplayed Musk’s contribution, publicly acknowledging it.The text was sent three months after Musk learned of Microsoft’s investment and seven months before the board fired Altman.
The trial began with $150 billion at stake Regarding whether OpenAI’s conversion from a non-profit organization to a non-profit corporation constituted a breach of charitable trust. Musk wants the court to reverse the conversion, remove Altman and Brockman, and direct damages to the nonprofit. OpenAI claims Musk is suing because he wanted control of the world’s most valuable AI company and failed to do so.
Hedge
As the trial continues in Oakland, Microsoft is quietly proving that Nadella is taking lessons from IBM. Microsoft has given up its exclusive license to OpenAI technologyIt retained only a non-exclusive contract until 2032. He did it voluntarily, which only makes sense if Microsoft no longer needs exclusivity because it has alternatives.
does. Microsoft introduced three built-in AI models It spent $13 billion to cultivate a direct challenger partner. Afraid of becoming IBM, the company responded by doing what IBM never did: build its own operating system before a partner blocked it. Nadella’s fear that Microsoft will be dependent on OpenAI in April 2022 seems to be the central concern of an entire corporate strategy designed to ensure that this never happens.
The trial is expected to continue until May 21 before Judge Yvonne Gonzalez Rogers. A jury will decide whether OpenAI’s leaders breached their charitable trust and whether Musk is owed compensation. But Nadella’s statement already answered a different question. The strongest corporate backer of the nonprofit’s AI mission invested because he feared his company would die without it. The $92 billion revenue forecast was not a byproduct of the partnership. That was the point. The non-commercial package that Musk claims was stolen may never have contained what the parties involved believed.
