In February 2018, Sam Altman, CEO of OpenAI, sent an email to Satya Nadel, CEO of Microsoft. Elon Musk was leaving a fledgling artificial intelligence lab, Mr. Altman wrote, and it was looking for investors.
After helping create OpenAI as a nonprofit, Mr. Musk clashed with Mr. Altman over the lab’s leadership. Now that he was leaving and taking the cash with him, Mr. Altman hoped to raise a huge amount of money. “We plan to raise a significant amount of capital for a for-profit subsidiary to develop supercomputers with artificial intelligence,” Mr. Altman told Mr. Nadel.
A year later, Microsoft invested $1 billion in a profitable new venture called OpenAI.
That investment has become one of the key points of Mr. Musk’s lawsuit against OpenAI. He claims that after OpenAI took the money — and another $12 billion from Microsoft over the next few years — it betrayed its founding mission of being a nonprofit organization dedicated to creating artificial intelligence that’s safe for the world.
Mr. Musk is seeking $150 billion in damages, the removal of Mr. Altman from OpenAI’s board and a reversal of the move OpenAI made last year to become a profitable company.
A few months after suing OpenAI in 2024, Mr. Musk amended the suit to include Microsoft. He accused Microsoft of aiding and abetting OpenAI when the lab abandoned its founding agreement as a non-profit organization.
On Monday, Mr. Nadella took the witness stand to begin the third week of the sensational trial in federal court in Oakland, California. It was the last day for Mr. Musk’s side to present its case, and OpenAI is expected to follow with closely watched testimony from Mr. Altman in the coming days.
Mr. Nadella said that while OpenAI has seen huge success following Microsoft’s investment, he doesn’t think the venture has violated the nonprofit’s original mission. Nor did he believe that Microsoft played a role in violating OpenAI’s founding agreement as a non-profit organization.
“I’ve always been of the opinion that a nonprofit has approved the creation of a for-profit fund in order to fulfill its mission,” Mr. Nadella said.
As the chief executive of OpenAI’s biggest investor, Mr Nadella had a behind-the-scenes look at the lab, which quickly grew from a small research group to one of the world’s most influential technology companies. As OpenAI grew and Microsoft added to its investment, he said, he never heard from Mr. Musk about his objections, even though “we have each other’s phone numbers.”
In the first two weeks of the trial, Microsoft’s lawyers indicated that Microsoft should not have been drawn into the legal tussle between Mr. Musk and Mr. Altman. But Mr. Musk’s lawyers, led by veteran lawyer Steven Mole, tried to paint Mr. Nadella as an invisible influence supporting Mr. Altman after OpenAI’s board temporarily fired him days before Thanksgiving 2023.
Through texts and emails admitted into evidence, Mr. Molo showed that Mr. Nadella played a role in Mr. Altman’s push to force his way back into OpenAI after just five days.
When Mr. Altman asked Mr. Nadella whether he would approve a new board that included former Treasury Secretary Lawrence H. Summers, Mr. Nadella responded by texting, “I’ll call Larry first.”
Mr. Nadella called the OpenAI board’s decision to fire Mr. Altman “an amateur’s hour as far as I’m concerned.”
During more than an hour of questioning, Mr. Molo repeatedly tried to show that Microsoft has significant control over OpenAI. He cited emails in which Mr. Nadella told Microsoft it should have full rights to OpenAI’s intellectual property, and pointed to an interview in which Mr. Nadella said Microsoft was surrounding OpenAI.
“We’re under them, above them, around them,” he told tech journalist Kara Swisher.
Mr Nadella said this was only a technical description, as OpenAI technologies were built and deployed through various Microsoft technologies.
Mr. Nadel was succeeded by Ilya Sutskever, OpenAI’s co-founder and former chief scientist. Dr. Sutskever was among the board members who fired Mr. Altman before Mr. Altman fought his way back into the company.
Dr. Sutskever said he voted to fire Mr. Altman because the OpenAI CEO had not been completely honest with other executives and board members. This, he said, created an environment that was not conducive to achieving the company’s goals, including the pursuit of artificial general intelligence, or AGI, essentially a machine that can do everything a human brain can do.
But after Mr. Altman was fired, Dr. Sutskever had other ideas and worried that Mr. Altman’s removal could destroy the company. “I worked really hard to create this company and it mattered a lot to me,” he said.
Dr. Sutskever added that he never promised Mr. Musk that OpenAI would remain a nonprofit, and that he was unaware of any such promises by Mr. Altman or anyone else at OpenAI.
Dr. Sutskever said that when Mr. Musk left OpenAI in 2018, he told him that the company had a “zero percent chance of success” because it would not be able to pay for the computing power it needed.
“If you don’t have a big enough computer,” added Dr. Sutskever, then OpenAI’s effort to build an AGI “won’t work.”
Mr. Musk’s legal team built its case on a simple concept: “It’s not OK to steal from charity,” as Mr. Musk said during his first day on the stand.
Mr. Molo compared today’s OpenAI to a museum shop that has taken over a museum. “The museum shop cannot rob the muse, steal all the Picassos and use them for profit,” he told the jury.
That straightforward message could resonate with the nine-member jury that will decide whether Mr. Altman and OpenAI are liable for the lawsuit’s claims, said Anupam Chander, a professor of law and technology at Georgetown Law School.
But Mr. Chander added that the jury could be swayed by one of OpenAI’s key points: Before leaving OpenAI, Mr. Musk repeatedly tried to turn the AI lab into a profitable company.
In 2017, he had a plan to turn the AI lab into his Tesla electric car company, which could provide the necessary money. He also tried to create a new trading company where he would control 55 percent of the operation, compared with Mr. Altman’s less than 8 percent.
“It’s like a cheating husband complaining about a cheating wife,” Mr Chander said. “It’s embarrassing to complain about something you want to do too.”
After a jury decides whether Mr. Altman and OpenAI are liable for Mr. Musk’s claims, the judge overseeing the trial, Yvonne Gonzalez Rogers, will decide on damages and remedies.
Mr. Chander, who has no connection to the case, said the judge could limit damages and remedies because Mr. Musk’s contribution to the lab ($38 million) was tiny compared to Microsoft and others ($10s of billions). This could mean that the judge decides that he is only entitled to a small amount of damages.
“I’ve always been skeptical of a federal judge taking a scalpel to a corporate structure,” Mr. Chander said. “That seems unlikely.
(The New York Times has sued OpenAI and Microsoft, alleging copyright infringement of news content related to AI systems. Both companies have denied the suit’s claims.)
