Microsoft aimed for $92B return on OpenAI investment, Nadella says

A January 2023 memo from Microsoft President Brad Smith to the company’s board projected a $92 billion return on Microsoft’s cumulative $13 billion investment in OpenAI, according to court documents disclosed Monday, May 11.

The figure surfaced during testimony by Microsoft CEO Satya Nadella at the federal courthouse in Oakland, California, per Bloomberg.

“It has worked out well because we took the risk,” Nadella told the jury. Microsoft’s 27% stake in OpenAI is now estimated at $135 billion. OpenAI was last valued at $852 billion following its $122 billion March funding round.

Nadella saw OpenAI as a Microsoft-scale threat

Under questioning from Musk’s lead trial attorney Steven Molo, Nadella confirmed he had drawn a historical parallel to Microsoft’s early PC partnership with IBM as the company prepared its $10 billion follow-on investment in OpenAI in April 2022.

In an internal email presented as evidence, Nadella wrote he did not want Microsoft to become IBM while OpenAI became the next Microsoft. The email captures the strategic calculation behind Microsoft’s bet: avoid the trap of being the infrastructure partner who lets a startup capture all the upside.

Microsoft’s investment timeline: $1 billion in 2019, doubled in 2021, then $10 billion in early 2023. The 2023 round is what the Brad Smith memo projected would return $92 billion.

Musk argues Microsoft helped redirect OpenAI’s mission

As Cryptopolitan reported, Musk’s attorneys called Nadella as their first witness Monday. The strategy is to use Microsoft’s own internal documents to show the company knowingly steered OpenAI toward profit despite its nonprofit charter. Musk seeks $79 billion to $134 billion in damages.

Under cross-examination, Nadella acknowledged he was not aware of any full-time employees at the OpenAI nonprofit before March 2026, or of any grants, research, or open-sourced technology it had produced.

Microsoft attorney Jay Jurata pushed back, walking Nadella through three major Microsoft-OpenAI milestones (the 2019 announcement, the 2020 GPT-3 exclusive license, the 2023 $10 billion investment) and asking each time whether Musk had objected.

Nadella said no each time. He noted he and Musk have each other’s phone numbers.

The verdict timeline

Sam Altman is expected to testify Tuesday or Wednesday. Closing arguments follow. The advisory jury could reach a verdict the week of May 18.

Judge Yvonne Gonzalez Rogers makes the final ruling after hearing the jury’s recommendation. She cut Musk’s fraud claims before trial, leaving breach of charitable trust and unjust enrichment as the remaining counts.

A ruling for Musk could jeopardize OpenAI’s planned IPO. OpenAI named the lawsuit as a “risk to business” in investor disclosures earlier this year.

Greg Brockman, whose stake in OpenAI is valued at $30 billion, testified last week about 2017 diary entries referencing “making money for us.” He also told the court that Musk physically threatened him in 2017 after Musk was denied majority control of OpenAI.

Microsoft has denied wrongdoing. OpenAI has called Musk’s case “baseless harassment” tied to xAI, his competing AI venture.

Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.