Microsoft CEO Satya Nadella took the witness stand in federal court on Monday to defend the technology giant’s deep partnership with OpenAI, as the high-profile legal battle between Elon Musk and Sam Altman intensified in Oakland, California.

Testifying in the closely watched Musk v Altman trial, Nadella said Musk never personally raised concerns with him that Microsoft’s investments in OpenAI violated any commitments tied to the artificial intelligence company’s nonprofit mission.

The testimony placed Microsoft’s role at the centre of a case that could reshape how courts interpret governance, control and commercialisation within leading AI companies.

According to CNBC, Nadella spent several hours answering questions about Microsoft’s strategic relationship with OpenAI, the company’s investments in the ChatGPT creator and the chaotic leadership crisis that briefly removed Altman as OpenAI chief executive in late 2023.

Microsoft’s OpenAI investments face legal scrutiny

Musk sued OpenAI, Altman and OpenAI president Greg Brockman in 2024, accusing the company of abandoning its nonprofit mission and prioritising commercial interests over public benefit.

Microsoft was also named as a defendant in the lawsuit, with Musk alleging the company aided OpenAI’s alleged breach of charitable trust obligations.

The case has placed significant attention on Microsoft’s financial relationship with OpenAI, which began years before generative AI entered the mainstream.

Microsoft has invested more than $13 billion into OpenAI through multiple funding rounds, including:

$1 billion in 2019

$2 billion in 2021

$10 billion in 2023

During his testimony, Nadella defended those investments as commercially motivated partnerships rather than charitable contributions.

“There was a clear commercial element from the outset,” Nadella said, according to CNBC’s courtroom reporting.

He added that Microsoft had initially offered OpenAI heavily discounted computing resources because the company believed the relationship would also generate long-term marketing and strategic value.

Nadella also said he was “very proud” that Microsoft backed OpenAI when “no one else was willing” to invest in the AI research lab.

Musk challenges OpenAI’s commercial transformation

Musk, who co-founded OpenAI alongside Altman and Brockman in 2015 before departing in 2018, has repeatedly argued that the company drifted away from its original charitable purpose after creating a for-profit structure.

During earlier testimony referenced by CNBC, Musk described Microsoft’s $10 billion investment as the “tipping point” that convinced him OpenAI was violating its nonprofit commitments.

“I was concerned they were really trying to steal the charity,” Musk testified.

The billionaire entrepreneur has also argued that Microsoft’s growing influence over OpenAI raises broader concerns around concentration of AI power.

“Do you really want Microsoft controlling digital superintelligence?” Musk asked during prior court testimony.

OpenAI established its for-profit subsidiary shortly after Musk’s departure, allowing it to raise large-scale external capital from investors including Microsoft.

The company’s valuation has since climbed to more than $850 billion, according to details cited during the trial.

In October, OpenAI completed a recapitalisation process that preserved nonprofit oversight while granting equity stakes in the for-profit arm.

As part of that restructuring, Microsoft disclosed that it held an estimated 27% stake in OpenAI’s for-profit unit, valued at approximately $135 billion.

Nadella recounts shock over Altman’s firing

A significant portion of Nadella’s testimony focused on the dramatic November 2023 decision by OpenAI’s board to remove Altman as chief executive.

At the time, the board said Altman had not been “consistently candid” in communications with directors.

Nadella told the court he was “pretty surprised” by the decision and immediately sought clarity from OpenAI’s board members because Microsoft was deeply integrated into OpenAI’s operations and customer ecosystem.

He said the explanation provided by the board lacked sufficient detail.

“It just didn’t sort of suffice, because this is the CEO of a company that we are invested in and we’re deeply partnered with,” Nadella testified.

The Microsoft chief suggested that internal tensions and communication failures may have contributed to the leadership crisis.

“It was sort of amateur city, as far as I’m concerned,” he said while describing the board’s handling of the situation.

Former OpenAI director Tasha McCauley had previously testified in a videotaped deposition that Nadella appeared interested in restoring the company’s previous leadership structure after Altman’s dismissal.

However, Nadella denied demanding that OpenAI reinstate Altman as CEO.

Altman ultimately returned to the role within days following intense negotiations involving employees, investors and board members.

Revenue and competition emerge as central themes

The courtroom proceedings also revealed new details about the commercial scale of Microsoft’s OpenAI partnership.

A videotaped deposition from Microsoft corporate development executive Michael Wetter stated that the company had recognised approximately $9.5 billion in revenue through the partnership as of March 2025.

Competition with Google also surfaced repeatedly during Nadella’s testimony.

Musk’s lawyer, Steven Molo, presented text exchanges between Nadella and Microsoft technology chief Kevin Scott discussing possible OpenAI board candidates.

Nadella acknowledged rejecting former Google executive Diane Greene as a potential OpenAI board member due to concerns about Microsoft’s AI rivalry with Google.

“I thought there were going to be conflicts because of our major competition with Google,” Nadella testified.

He added that Google had been Microsoft’s primary AI competitor since its acquisition of DeepMind.

The court also heard about a 2022 Nadella email in which he wrote: “I don’t want to be IBM and OpenAI to be Microsoft”, referencing the historic personal computing partnership that ultimately strengthened Microsoft’s position over IBM.

OpenAI’s future remains under legal and commercial pressure

Following Nadella’s testimony, former OpenAI chief scientist and co-founder Ilya Sutskever took the stand, discussing his concerns over Altman’s leadership and his role in the events leading to Altman’s brief removal.

OpenAI board chairman Bret Taylor also appeared before the court and is expected to continue testimony.

Meanwhile, Altman himself is scheduled to testify next, according to his legal team.

The trial has become one of the most consequential legal confrontations in the AI industry, exposing tensions around governance, profit motives, investor influence and the future ownership of advanced artificial intelligence systems.

For Microsoft, the proceedings also underline the delicate balance between strategic partnership and corporate control at a time when OpenAI remains central to the company’s long-term AI ambitions.