Artificial Intelligence & Machine Learning
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Litigation
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Next-Generation Technologies & Secure Development
Nadella Defends $13B OpenAI Investment as Musk’s Case Nears Its End
Jennifer Lawinski •
May 12, 2026
Microsoft CEO Satya Nadella at a conference in New York City on Oct. 7, 2025. (Image: FotoField/Shutterstock)
Microsoft CEO Satya Nadella testified Monday that Elon Musk never raised concerns about Microsoft’s $13 billion investment in OpenAI, even though the two tech leaders “have each other’s phone numbers,” as the company tried to debunk allegations that it colluded to turn OpenAI into a for-profit entity, violating its founding charter and raking in billions.
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Nadella spent more than two hours on the stand in Oakland federal court in the final day of testimony for Musk’s side of the case. Musk added Microsoft to his lawsuit against OpenAI in November 2024, five years after the company’s initial investment in OpenAI. Sam Altman takes the stand Tuesday and Wednesday.
Microsoft’s defense is simple. They came late to the party and had no idea they had missed all the action. By the time Microsoft had invested in OpenAI in 2019, OpenAI had already parted ways with Musk and they were participating in a structure that OpenAI’s board had already created. No one had informed them that its investments violated any conditions.
“It has always been my view that the nonprofit approved the creation of the for-profit so that they could pursue the mission,” Nadella said.
Nadella testified that Musk never contacted him with concerns that Microsoft’s investments in OpenAI were in violation of any special terms or commitments, and that from the start, Microsoft viewed its relationship with OpenAI as an investment opportunity. Microsoft expected returns on the sharp discounts it had given OpenAI on computing resources.
Courtroom reporting indicates Microsoft had generated about $9.5 billion in sales from its OpenAI partnership as of March 2025, while an internal Microsoft projection presented at trial estimated a $92 billion return on the company’s $13 billion OpenAI investment.
Musk’s team used that data to frame Microsoft as an active conspirator in Altman’s alleged mission to “steal a charity.”
Nadella disputed that assertion. “I’m very proud of the fact we took the risks when no one else was willing to sponsor this fledgling lab,” he said.
Microsoft said that it had done its homework before making its investments in OpenAI and did nothing wrong. The computing giant’s attorneys in a court filing said that before Microsoft’s first investment in 2019, the company conducted an extensive review of OpenAI’s governance documents, IRS tax filings, and capitalization records and found no evidence of conditions on Musk’s contributions. “Microsoft thus had no visibility into Musk’s private alleged donation conditions – and no one ever told Microsoft about them,” the company wrote.
OpenAI’s IRS tax exempt application listed no agreements with Musk in response to direct government questions about obligations to officers and donors. OpenAI also gave Microsoft explicit contractual warranties in its 2019, 2021 and 2023 investment agreements, each time affirming the deals would not violate any third-party rights. The OpenAI nonprofit board approved every transaction.
Microsoft’s attorneys have argued that a company that conducted that level of diligence, received those written assurances, and watched the nonprofit board approve every deal three separate times cannot be held liable for aiding and abetting a breach it had no reason to know existed.
Nadella was also questioned on Microsoft’s role in returning Altman to the CEO role after OpenAI’s board fired him in November 2023. Text messages in evidence showed that Altman asked Nadella if he would approve of a new board that included former Treasury Secretary Lawrence Summers.
“Let me call Larry first,” Nadella texted.
Nadella told the jury he was “pretty surprised” that the board had ousted Altman, and that he had not been informed in advance and was told after being pulled from a meeting. “It was sort of amateur city, as far as I’m concerned,” he said.
He was told that Altman had not been “sufficiently candid” with the board, and he found that insufficient. He said the explanations he was given “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, and so I felt that they could have explained to me what are the incidents or what is the detail behind it.”
Closing arguments are expected Thursday, and the advisory jury is scheduled to deliver its views the week of May 18. The judge is not bound by the jury’s verdict and will independently determine damages and remedies.