Satya Nadella defended Microsoft’s long-running partnership with OpenAI during testimony in a California courtroom on Monday, saying Elon Musk never personally contacted him to object to Microsoft’s investments in the AI company.

Appearing in federal court in Oakland as part of Musk’s lawsuit against OpenAI and its leadership, Nadella spent several hours answering questions about Microsoft’s billions of dollars in backing for the ChatGPT maker, the internal turmoil around Sam Altman’s brief removal as CEO, and how Microsoft viewed the relationship from the beginning.

Nadella made it clear that Microsoft never considered its OpenAI partnership to be charitable in nature. According to him, the deal always had commercial goals attached to it, including cloud business growth, AI product integration and long-term strategic value.

He told the court Microsoft took a major gamble by backing OpenAI years before generative AI became mainstream.

“We were willing to support them early when many others were not,” Nadella said during testimony.

Musk’s lawsuit argues that OpenAI moved away from its original nonprofit mission after attracting huge investments from Microsoft. Musk claims the company shifted toward a profit-focused structure that benefited executives and investors rather than the broader public interest the organisation originally promised to serve.

Microsoft has invested more than $13 billion in OpenAI since 2019, making it the company’s largest outside partner. Court testimony on Monday showed just how valuable that partnership has become. A prerecorded statement from Microsoft executive Michael Wetter said the company had generated nearly $9.5 billion in revenue linked to OpenAI by March 2025.

Musk, who testified earlier in the case, said Microsoft’s multibillion-dollar investment was the moment he began seriously questioning whether OpenAI was still operating in line with its founding principles.

Nadella, however, said Musk never directly expressed those concerns to him.

Nadella Criticises OpenAI Board Over Altman Ouster

The hearing also revisited the dramatic November 2023 leadership crisis at OpenAI, when CEO Sam Altman was abruptly removed by the company’s board before being reinstated within days.

Nadella said he was shocked by the decision and frustrated by the lack of explanation provided to Microsoft, despite the companies being closely tied through products and infrastructure.

OpenAI’s board had publicly stated that Altman was removed because he had not been “consistently candid” in communications. Nadella testified that the wording raised more questions than answers.

He said Microsoft needed clarity because of how deeply integrated OpenAI’s technology had become within Microsoft’s business operations.

According to Nadella, he repeatedly sought details from board members about what exactly had happened, but did not receive meaningful explanations.

At one point, he described the handling of the situation as “amateur city.”

Nadella also rejected suggestions that Microsoft pressured OpenAI’s board to restore Altman as CEO, though he admitted Microsoft was focused on ensuring stability during the chaotic period.

OpenAI’s Shift to a For-Profit Structure Under Spotlight

The case continues to centre on OpenAI’s transformation after Musk left the organisation in 2018.

Musk helped launch OpenAI in 2015 alongside Altman, Greg Brockman and Ilya Sutskever. But disagreements over the company’s direction eventually led to his exit.

OpenAI later created a for-profit arm that allowed it to raise large-scale outside funding. That move paved the way for Microsoft’s investments and helped OpenAI grow into one of the world’s most valuable AI companies.

Musk argues the nonprofit side of OpenAI effectively lost control as commercial interests expanded.

Nadella pushed back against that narrative in court, saying Microsoft always viewed the relationship as a business partnership rather than a nonprofit collaboration.

AI Competition Also Emerged During Testimony

The courtroom exchanges also highlighted the intense rivalry among major tech companies in the AI race.

Lawyers presented internal messages discussing possible candidates for OpenAI’s board after Altman’s firing. Nadella acknowledged opposing one proposed candidate, former Google executive Diane Greene, because of her ties to Google.

He said Google had long been Microsoft’s biggest competitor in artificial intelligence.

Nadella also discussed an older internal email in which he wrote that he did not want “Microsoft to become IBM while OpenAI becomes Microsoft,” referencing how Microsoft eventually overtook IBM in the personal computer era despite initially being its partner.

After Nadella concluded his testimony, OpenAI co-founder Ilya Sutskever took the stand and spoke about his concerns over Altman’s leadership during the 2023 board crisis.

The trial is set to continue with further testimony from Altman and other current and former OpenAI leaders.