Nadella Takes the Stand Today. He Has to Explain Why Microsoft Bet $13 Billion on a Company Its Own Executives Called 'Worthless.'
Microsoft's CEO testifies today in the Musk v. OpenAI trial, forced to explain how a company his own team called 'a bucket of undifferentiated GPUs' became worth a $13 billion bet.
The AI Post newsroom — delivering AI news at the speed of intelligence.
Satya Nadella takes the witness stand today in San Francisco federal court, and he's going to have to explain one of the biggest pivots in tech history. How did Microsoft go from calling OpenAI "a bucket of undifferentiated GPUs" to betting $13 billion on the company? The irony is thick enough to cut with a knife.
Internal Microsoft emails entered as evidence in Week 2 of the Musk v. OpenAI trial paint a picture of deep skepticism from Microsoft's entire AI leadership team. CTO Kevin Scott called OpenAI "a bucket of undifferentiated GPUs" and was "highly skeptical of imminent AGI breakthrough." The AI team said there was "no value in engaging." Jason Zander, Executive VP for Azure, worried about the "worst case" scenario of OpenAI "ditching Azure for AWS." Even Microsoft's research team thought their own work was "more advanced."
Nadella himself wasn't sold. In a 2018 email, he wrote: "I can't tell what research they are doing and how if shared with us it could help us get ahead." The PR team opposed the "machines beating humans" framing. When Altman asked for $300 million in Azure credits, even the Xbox team couldn't commit $35-50 million.
Then everything changed. Eighteen months later, Microsoft invested $1 billion. Then $13 billion more. What flipped the script? Fear. Microsoft was terrified of losing OpenAI to Amazon. The Verge reported that Microsoft executives worried OpenAI would "shit-talk" Azure if the partnership fell through. So they opened the checkbook.
The cosmic irony? OpenAI committed $138 billion to AWS anyway. The exact Amazon scenario Microsoft feared most came to pass despite their massive investment. Now Nadella has to explain this strategic whiplash under oath, with Elon Musk seeking $134-150 billion in damages for what he claims was a betrayal of OpenAI's nonprofit mission.
Ilya Sutskever, OpenAI's former chief scientist and the man who briefly ousted Sam Altman last year, testifies after Nadella. Judge Yvonne Gonzalez Rogers is expected to wrap testimony by May 13, with closing arguments scheduled for May 14. This is Week 3 of what's become the most consequential AI trial in history.