Over the past few years, Tesla CEO and billionaire Elon Musk has dragged OpenAI and CEO Sam Altman to court, citing involvement in racketeering and a fake humanitarian mission.
As you may know, the Musk v. Altman trial is still ongoing in court, where the billionaire claims he was defrauded out of billions of dollars that he invested in OpenAI. He claims that the company abandoned its founding mission after it transitioned from a non-profit business structure to a combination of a non-profit and for-profit arm, shortly after he departed.
More recently, court documents shed further light on the early days when Microsoft CEO Satya Nadella and OpenAI CEO Sam Altman were discussing forming their multi-billion-dollar partnership. Interestingly, high-profile Microsoft executives seemed to be a bit skeptical about investing in OpenAI, expressing fears that the AI startup could "storm off to Amazon" and potentially "shit-talk" Microsoft (via The Verge).
For context, OpenAI was mainly focused on developing AI-powered gaming bots, which seemingly caught the eye of Microsoft CEO Satya Nadella when the company's bot managed to beat a Dota 2 professional. Nadella sent Altman a congratulatory email, which he (Altman) seized as an opportunity to propose an even bigger partnership between OpenAI and Microsoft.
However, OpenAI needed much more computing power to scale its Dota 2 project, which was significantly more than the Azure credits it was receiving from Microsoft at the time. “Probably something like $300 million at Azure list prices,” Altman indicated.
This ended up spooking some of the top executives at Microsoft. “For those numbers to make sense, we’d have to be generating significant incremental revenue directly due to the deal ($500 million+) that couldn’t be gained in a more efficient way,” indicated Jason Zander, who was Microsoft’s Azure chief at the time, in an August 2017 email to Nadella.
I guess the other thing to think about here is the PR downside of us not funding them, and having them storm off to Amazon in a huff and shit-talk us and Azure on the way out. They are building credibility in the AI community very fast, recruiting well, and are going to be an influential voice. All things equal, I’d love to have them be a Microsoft and Azure net promoter. Not sure that alone is worth what they’re asking.
Microsoft CTO, Kevin Scott
Later on, Sam Altman circled back with an alternative proposal to “create a partnership with Xbox around gaming, and an open offer to share their technology and IP in exchange for expanded sponsorship for their Dota research,” as highlighted by Brett Tanzer, Microsoft's VP of Azure solutions and ecosystem.
While Microsoft's Xbox division was open to exploring new collaboration opportunities, committing to the research cost was an uphill task. Microsoft CTO Kevin Scott admitted to Satya Nadella that he wasn't sure what the company would get out of the deal if it agreed to give OpenAI more Azure credits for its research. At the same time, he was concerned about OpenAI moving to Amazon for support.
A year later, in 2019, Kevin Scott admitted to Microsoft co‑founder Bill Gates and CEO Satya Nadella that he had been "highly dismissive" of AI efforts at OpenAI and Google DeepMind, when the companies were busy competing to see who "could achieve the most impressive game‑playing stunt."
Scott became more interested in the AI game when OpenAI shifted to natural language processing models like ChatGPT, which signaled that Microsoft would shift behind Google's AI efforts, leading to Microsoft's making its first $1 billion investment in OpenAI, even though Bill Gates was against the idea and viewed it as a waste.
In 2026, a separate report emerged suggesting that Microsoft was considering suing OpenAI over a $50 billion deal with Amazon, alleging that it violates a critical clause granting Microsoft exclusive rights as OpenAI’s cloud provider through Azure.
So, Microsoft's multi-billion-dollar partnership with OpenAI continues to be fragmented. Recently, the ChatGPT maker ended its exclusive partnership with Microsoft, meaning Microsoft will no longer need to pay a revenue share to OpenAI. How much more fragmented could all this possibly get?
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