In February 2018, Sam Altman, the chief executive of OpenAI, sent an email to Satya Nadella, the chief executive of Microsoft. Elon Musk was leaving the young artificial intelligence lab, Mr. Altman wrote, and it was looking for investors.
After helping to create OpenAI as a nonprofit, Mr. Musk tussled with Mr. Altman over the lab’s direction. Now that he was leaving and taking his cash with him, Mr. Altman hoped to raise huge amounts of money. “We are planning to raise a significant amount of capital for a for-profit subsidiary to develop super capable A.I. computers,” Mr. Altman told Mr. Nadella.
A year later, Microsoft invested $1 billion in OpenAI’s new for-profit venture.
That investment has become one of the key points in Mr. Musk’s lawsuit against OpenAI. He claims that after OpenAI took the money — and an additional $12 billion from Microsoft over the next few years — it betrayed its founding mission to be a nonprofit dedicated to the creation of A.I. that is safe for the world.
Mr. Musk is asking for $150 billion in damages, Mr. Altman’s removal from OpenAI’s board of directors, and that the company unwind a shift it made last year to become a for-profit company.
Several months after suing OpenAI in 2024, Mr. Musk amended the suit to include Microsoft. He accused Microsoft of aiding and abetting OpenAI as the lab abandoned its founding contract as a nonprofit.
On Monday, Mr. Nadella took the witness stand to start the third week of a blockbuster trial in a federal court in Oakland, Calif. It was the final day that Mr. Musk’s side presented its case, and OpenAI is expected to follow in the next few days with closely watched testimony from Mr. Altman.
Mr. Nadella said that even though OpenAI went on to enormous success after Microsoft’s investment, he did not think that the venture violated the original mission of the nonprofit. Nor did he believe Microsoft played a role in breaking OpenAI’s founding contract as a nonprofit.
“It has always been my view that the nonprofit approved the creation of the for-profit so that they could pursue the mission,” Mr. Nadella said.
As the C.EO. of OpenAI’s biggest investor, Mr. Nadella had behind-the-scenes insight into the lab as it quickly expanded from a small research group into one of the most influential tech companies in the world. 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 implied that Microsoft should not have been drawn into the legal squabble between Mr. Musk and Mr. Altman. But Mr. Musk’s lawyers, led by the experienced litigator Steven Molo, tried to portray Mr. Nadella as an unseen influence backing Mr. Altman after OpenAI’s board temporarily fired him a few days before Thanksgiving in 2023.
Through texts and emails admitted as evidence, Mr. Molo showed that Mr. Nadella played a role in Mr. Altman’s efforts to push his way back into OpenAI after just five days.
When Mr. Altman asked Mr. Nadella if he would approve of a new board of directors that included former U.S. Treasury Secretary Larry Summers, Mr. Nadella responded with a text saying: “Let me call Larry first.”
Mr. Nadella called the OpenAI board’s decision to remove Mr. Altman “amateur hour, as far as I’m concerned.”
During more than an hour of questioning, Mr. Molo repeatedly tried to show that Microsoft had significant control over OpenAI. He cited emails in which Mr. Nadella told Microsoft that it should have full rights to OpenAI’s intellectual property, and he pointed to an interview in which Mr. Nadella said that Microsoft surrounded OpenAI.
“We are below them, above them, around them,” he told the tech journalist Kara Swisher.
Mr. Nadella said that was just a technical description, because OpenAI’s technologies were built and deployed through various Microsoft technologies.
After Mr. Nadella, the OpenAI co-founder and former chief scientist Ilya Sutskever took the stand. Dr. Sutskever was among the OpenAI board members who removed Mr. Altman in late 2023, before Mr. Altman fought his way back into the company.
Dr. Sutskever said that he voted to remove Mr. Altman because the OpenAI chief executive was not completely candid 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 A.G.I., essentially a machine that can do anything the human brain can do.
But after Mr. Altman was fired, Dr. Sutskever had second thoughts, and worried that Mr. Altman’s removal might destroy the company. “I worked really hard to create this company and I cared very much about it,” he said.
Dr. Sutskever added that he never made a promise to Mr. Musk that OpenAI would remain a nonprofit and that he was not aware 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 wouldn’t be able to pay for the computer power it needed.
“If you don’t have a big enough computer,” Dr. Sutskever added, then OpenAI’s effort to build A.G.I. “was not going to work.”
Mr. Musk’s legal team built its case around a simple concept: “It is not OK to steal a charity,” as Mr. Musk said during his first day on the stand.
Mr. Molo compared today’s OpenAI to a museum store that had taken over the museum. “A museum store can’t loot the muse, steal all the Picassos and use them to turn a profit,” he told the jury.
That straightforward message could resonate with the nine-person jury who will decide whether Mr. Altman and OpenAI are liable for the suit’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 transform the A.I. lab into a for-profit company.
In 2017, he had a plan to fold the A.I. lab into his electric car company, Tesla, which could provide the money it needed. He also tried to create a new commercial company where he would control 55 percent of the operation, compared with a less than 8 percent stake for Mr. Altman.
“This is like the cheating husband complaining about the cheating wife,” Mr. Chander said. “It is awkward complaining about something that you, too, want to do.”
After the jury decides if Mr. Altman and OpenAI are liable for Mr. Musk’s claims, Judge Gonzalez Rogers will decide on damages and remedies.
Mr. Chander, who has no connection to the case, said that the judge could limit the damages and remedies because Mr. Musk’s contribution to the lab ($38 million) was tiny compared with Microsoft’s and others’ (tens of billions of dollars). That could mean that the judge will decide that he is entitled only to small damages.
“I have always been skeptical of a federal judge taking a surgical knife to corporate structure,” Mr. Chander said. “That seems unlikely.”
(The New York Times has sued OpenAI and Microsoft, claiming copyright infringement of news content related to A.I. systems. The two companies have denied the suit’s claims.)
Cade Metz is a Times reporter who writes about artificial intelligence, driverless cars, robotics, virtual reality and other emerging areas of technology.
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