Court Hearing Reveals Microsoft Executive Once Jointly Disparaged OpenAI, Invested $1 Billion Solely Out of Fear of OpenAI Moving to Amazon

According to Insight Beating monitoring, the Musk v. Altman court case presented over a dozen internal emails from Microsoft executives between 2017 and 2018, including CEO Nadella. These emails revealed one thing: before investing $1 billion, almost no one within Microsoft had confidence in this small non-profit lab.

In 2016, after Musk's introduction, Microsoft offered a significant discount to OpenAI for $60 million in Azure cloud services, but OpenAI's usage was double the original expectation. In August 2017, Nadella congratulated OpenAI on winning a game AI competition, and ten days later, Altman replied requesting $300 million in computing power, stating "this would be the most impressive achievement in AI history."

Nadella forwarded this to four deputies for feedback, and the responses were lukewarm: the AI team "couldn't see the value of collaboration"; the research team felt their own capabilities were "more advanced"; the PR team was averse to endorsing an organization promoting "machines defeating humans." Executive VP Jason Zander concluded that Azure could leverage Musk and Altman's reputation for publicity but didn't want to "lose big."

In January 2018, Nadella consulted another 15 executives regarding OpenAI. He admitted, "I don't see what research they are doing or how it benefits us," but also acknowledged, "they are pushing AI harder than all our internal teams and external partners." CTO Kevin Scott directly challenged: "I highly doubt AGI is imminent. They treat us as a bucket of undifferentiated GPUs."

However, Scott then pointed out the real fear everyone had: cutting off support for OpenAI, as "they would angrily run to Amazon and badmouth Azure on their way out." Zander agreed, stating the worst-case scenario would be OpenAI switching to AWS and producing great results later used by competitors.

Nevertheless, Microsoft eventually informed Altman that no internal team was willing to sponsor OpenAI. The turning point came about 18 months later. OpenAI established a for-profit subsidiary, bringing the potential for Microsoft to receive up to a $200 billion return. With a financial incentive, Microsoft invested $1 billion, later increasing it to $13 billion over four years.

Unfortunately, Microsoft's biggest fear at the time eventually happened: in the past few months, OpenAI signed a $138 billion cloud service agreement with Amazon, where Amazon pledged to invest $15 billion to $50 billion in OpenAI.

Nadella will testify in court in person next Monday.