Satya Nadella says OpenAI deals were not donations

Microsoft CEO Satya Nadella filed a lawsuit Monday in federal court in Oakland, California, in Musk v. He took the stand to testify in the Altman trial.

Dressed in a navy blue suit and blue tie, Nadella began his testimony by answering questions about his role at Microsoft and the early days of the company’s strategic partnership with OpenAI. He said he was “very proud” that Microsoft took the risk of investing in OpenAI at a time when “nobody was willing to invest in a fledgling lab.”

in 2024 Elon Musk has filed a lawsuit against OpenAI, its CEO Sam Altman, and chairman Greg Brockman, alleging that they reneged on their vows to maintain the AI ​​company’s non-profit structure and follow its philanthropic mission. Microsoft is named as a defendant in the lawsuit, as Musk accuses the company of aiding and abetting OpenAI’s alleged breach of charitable trust.

Microsoft has been one of OpenAI’s biggest supporters since 2019, years before the company went mainstream with the launch of its ChatGPT chatbot in late 2022. 2 billion dollars The investment to be made in 2021 and $10 billion in 2023 was brought up repeatedly throughout the trial.

Nadella said on the podium that he did not believe Microsoft’s investments in OpenAI were donations and that there was a clear commercial element to their partnership from the beginning.

He said that in the early years of the partnership, Microsoft gave OpenAI large discounts on computing resources, and Microsoft believed it would reap marketing benefits from this.

Testifying late last month, Musk said Microsoft’s $10 billion investment was the key turning point that led him to believe OpenAI was violating its nonprofit mission. He stated that the size of the investment disturbed him and this prompted him to launch a legal investigation against OpenAI.

“I was really worried that they were trying to steal the charity,” Musk said from the podium.

Nadella said Musk never reached out to him to express that Microsoft’s investments in OpenAI violated any specific terms or commitments.

Musk founded OpenAI in 2015 with Altman, Brockman and several other executives and researchers. Following a series of disagreements over OpenAI’s direction, including a failed attempt to merge with the automaker Tesla’sMusk left the OpenAI board in 2018. He went on to found xAI, a rival AI startup, and merged it with SpaceX earlier this year.

OpenAI formed a for-profit subsidiary in the months following Musk’s departure, allowing the company to more easily raise external funds. Investors including Microsoft have since poured billions of dollars into OpenAI’s for-profit arm, pushing the company’s valuation to more than $850 billion.

In October, OpenAI completed a recapitalization that strengthened its structure as a nonprofit organization with an equity stake in its nonprofit business. As part of this announcement, Microsoft disclosed a roughly 27% stake in OpenAI’s for-profit unit, valued at approximately $135 billion.

The relationship between OpenAI and Microsoft has shown signs of strain in recent months, although both companies continue to argue that it is strategic and core to their business. Late last month, Musk v. On the day jury selection began in the Altman case, the companies announced a renewed partnership agreement that would allow OpenAI to cap revenue share payments and serve customers through any cloud provider.

OpenAI said in one release He said the agreement aims to “simplify our partnership and the way we work together.”

Musk said he wasn’t entirely opposed to OpenAI having a for-profit unit, but said it became “the tail wagging the dog.” He repeatedly accused Altman and Brockman of enriching themselves from a charity while also taking advantage of the positive connotations that come from running a nonprofit.

“Microsoft has its own motivations, and that would be different from the charity’s motivations,” Musk said from the podium. “With all due respect to Microsoft, do you really want Microsoft to control digital superintelligence?”

During a videotaped deposition shown in court last week, former OpenAI director Tasha McCauley recalled her discussion with Nadella and board members following the 2023 decision to oust Altman as OpenAI’s CEO.

“As I recall, Satya wanted to get things back to the way they were,” McCauley said. He said board members didn’t think it was the right move.

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