Satya Nadella spent roughly two and a half hours on the witness stand on Monday, 11 May, in the federal Musk v. Altman trial in Oakland. He answered questions about Microsoft's investment in OpenAI, his role during the brief ouster of Sam Altman in November 2023, and whether Elon Musk had ever contacted him to raise concerns about the partnership. On that last point, Nadella's answer was no — at none of the three milestones Microsoft's lawyer walked him through (the 2019 announcement, the 2020 exclusive GPT-3 licence, the 2023 $10 billion investment) had Musk reached out, despite the two having each other's phone numbers.
For anyone running Microsoft 365 Copilot, Azure OpenAI, or any of the growing list of enterprise AI workloads built on this partnership, the trial is more than courtroom theatre. It's a rare public look at how the relationship was assembled — and what's currently holding it together.
What's actually being argued
Musk sued OpenAI, Altman and OpenAI president Greg Brockman in 2024, alleging they walked back a founding commitment to keep OpenAI a nonprofit dedicated to developing AI for humanity's benefit, then accepted billions from Microsoft and restructured into a for-profit subsidiary. Microsoft is named as a co-defendant, accused of aiding and abetting an alleged breach of charitable trust.
A federal judge dismissed Musk's fraud claims before trial. The case that went to the jury is narrower: breach of charitable trust and unjust enrichment, with damages estimated by Musk's expert witness in the range of $79 billion to $134 billion. Musk is also asking the court to remove Altman and Brockman and unwind OpenAI's restructuring.
OpenAI's counter-argument is direct: Musk is suing because he didn't get the deal he wanted in 2017 — majority control of a for-profit OpenAI, with the right to appoint most of the board — and is now trying to undermine a competitor to his own AI company, xAI. The company has characterised the suit as baseless.
Nadella's version of the partnership
The investment numbers got a thorough working-over in court: $1 billion in 2019, $2 billion in 2021, $10 billion in 2023 — more than $13 billion total. Nadella testified he was proud Microsoft backed the lab when, as he put it, others wouldn't, and pushed back on any characterisation of the funding as charitable. The arrangement was commercially motivated from the start, he said, including early reduced pricing on Microsoft compute.
One of the new disclosures from his testimony was an April 2022 internal email, surfaced by Musk's lead trial attorney Steven Molo, in which Nadella drew a historical parallel to Microsoft's early partnership with IBM. He didn't want Microsoft to end up the next IBM while OpenAI became the next Microsoft. He described the $10 billion bet as a "one-way door": Microsoft couldn't build two supercomputers — one for itself and one for OpenAI — and had to accept the opportunity cost of diverting compute away from its own AI work.
Musk's side also introduced a January 2023 memo from Microsoft president Brad Smith to the board, projecting a $92 billion return on Microsoft's cumulative $13 billion investment. Nadella confirmed the figures but noted the return could just as easily have been zero.
On the November 2023 governance crisis, Nadella testified he never demanded the board reinstate Altman, and characterised the board's handling of the firing as "amateur city." Musk's lawyer produced text messages between Nadella and Microsoft CTO Kevin Scott discussing potential replacement board members. Among the previously redacted names that emerged in court: Coinbase COO Emilie Choi, former LinkedIn CEO Jeff Weiner, former Alphabet director Diane Greene, and former Gates Foundation CEO Sue Desmond-Hellmann — the last of whom was later appointed to the board. Nadella testified he objected to Greene and to former Kleiner Perkins partner Bing Gordon because of their ties to Microsoft AI competitors, and that the discussions were initiated by Altman and other OpenAI insiders seeking his input.
The restructuring nobody can ignore
In October 2025, OpenAI completed a recapitalisation that turned its for-profit arm into a public benefit corporation, OpenAI Group PBC, controlled by the OpenAI Foundation nonprofit. Microsoft's stake settled at roughly 27 percent, valued at approximately $135 billion, with IP rights extended through 2032. The deal valued OpenAI at $500 billion.
A revised partnership announced the same day jury selection began made Microsoft's IP licence non-exclusive, allowed OpenAI to serve customers across any cloud, ended Microsoft's right of first refusal as OpenAI's compute provider, and committed OpenAI to $250 billion in Azure spend. Both companies framed it as simplification; reporting at the time and since has described the negotiation as a source of tension.
That restructuring is what Musk wants undone. If the court orders it unwound, or removes Altman and Brockman, the consequences ripple straight into the roadmap of every product built on OpenAI's APIs — including Microsoft's own Copilot stack.
Why this matters for the Microsoft ecosystem
Strip away the personalities and a few questions remain that actually affect architects and procurement leads.
How durable is the Microsoft–OpenAI partnership under stress? The trial is forcing both sides to put their version of the relationship on the record, which is useful even when uncomfortable. The October 2025 amendments — non-exclusive IP, multi-cloud distribution, the end of Microsoft's right of first refusal — make clear the partnership has loosened materially compared with the 2019 original.
What's the governance risk in the model layer? Enterprise buyers are used to scrutinising vendors for financial stability and roadmap clarity. The trial is a reminder that, at the frontier of AI, governance risk is a distinct category: board dynamics and corporate structure can move faster than a renewal cycle.
What's the diversification picture? Microsoft's IP rights now exclude OpenAI's consumer hardware, and OpenAI can release open-weight models that meet defined capability criteria. Microsoft can independently pursue AGI alone or with third parties. The legal stack has been rewritten to give both sides more room — that's the practical context any enterprise architect should keep in mind when reading procurement contracts referencing either party.
What to watch next
Altman's testimony was scheduled to begin Tuesday, with closing arguments expected Thursday, 14 May. Brockman has already testified that Musk was the one pushing for a for-profit structure and wanted "absolute control" over it — a version of events squarely at odds with Musk's. Ilya Sutskever, who testified after Nadella, told the jury he had no knowledge of any promises by Microsoft or Altman that OpenAI would remain a nonprofit, and summarised his view in a single line: the mission of OpenAI is larger than the structure.
The broader competitive context isn't subtle. In February 2026, SpaceX absorbed xAI in an all-stock deal at a combined $1.25 trillion valuation, and reporting points to a SpaceX IPO as soon as June at a target valuation of around $1.75 trillion. Whatever the jury decides in Oakland, the case record will be a primary source for years to come.
For European technology leaders, the practical takeaway is less about which side wins and more about what the case exposes: the AI stack that much of enterprise IT is building on rests on a small number of commercial relationships, and those relationships are now being stress-tested in open court. That is precisely the kind of architectural and governance question the ECS community has been working through across cloud, collaboration and AI tracks all year.