Musk v. Altman: Inside the courtroom as Microsoft’s $13B OpenAI bet continues its trial

OAKLAND – Was Microsoft deliberately helping OpenAI to abandon its non-profit work?

That question is at the center of a lawsuit starting here this week, pitting the world’s richest man against the AI ​​nonprofit he helped found and the tech giant that bankrolled its transformation.

It’s called the “AI Trial of the Century,” with Elon Musk and Sam Altman playing the roles, along with a supporting cast that includes Microsoft CEO Satya Nadella, CTO Kevin Scott and CFO Amy Hood. Current and former OpenAI executives and board members are also on the witness list.

On Monday morning in Oakland, Altman and OpenAI President Greg Brockman were on hand for jury selection, with the OpenAI CEO sitting in the front behind the lawyers’ tables in a dark suit and blue tie, silently scrolling through his phone as he waited for the proceedings to begin.

Musk was not present at the jury selection. He is expected to take this position later in the case.

A protest was scheduled for noon outside the courthouse, organized by the Tesla Takedown activist group under the banner “Whoever Wins, Loses” – saying the multibillion-dollar power struggle over the future of AI has little to do with ordinary people.

Selection of judges: Inside, US District Judge Yvonne Gonzalez Rogers explained the case to the jury: Musk alleges breach of trust of a charitable organization and unjust enrichment against Altman, Brockman, and OpenAI, as well as aiding and abetting Microsoft’s breach of trust – centered on the operation of OpenAI as a non-profit organization and the creation of its subsequent profit organization.

Prospective judges were asked about topics including their views on AI and the parties involved.

One man said he is an avid news reader who continues to subscribe to the newspaper – to applause from reporters listening in the overflowing room. He was very vocal about the plaintiff: “I have strong feelings about Elon and the way he does things. Elon doesn’t care about people, like our president. He cares about money.

The nurse said that AI is creating more work in her work, which needs to be evaluated and adjusted regularly.

One prospective juror, when asked by the judge if he worked in groups, asked if the judge was talking about a conference call. “Microsoft is glad you asked that question,” the judge said.

When one prospective juror expressed concern about being able to follow the technical aspects of the case, the judge replied, “This is just a case about promises and broken promises.”

What’s at stake for Microsoft: In the middle of a dispute between two very divisive tech personalities, Microsoft may be seen as an episode, but its actions are at the heart of the case.

The company has invested more than $13 billion in OpenAI since 2019, co-developing its products and betting its competitive future on the deal, before betting more recently with rival AI firms and its own internal models.

Elon Musk’s victory would mean that a federal judge orders Microsoft to give a piece of what its OpenAI partnership was worth — not to Musk, but to the OpenAI nonprofit.

Musk’s damages expert puts the combined demand at $134 billion for both defendants, while Microsoft’s share is between $13.3 billion and $25 billion. However, the judge has already questioned the figures, saying that Musk’s expert is “pulling these numbers out of thin air.” Microsoft called the method “unverifiable” and “unprecedented.”

The loss could also give regulators in the United States and Europe new ammunition as the company tries to protect its OpenAI partnership from antitrust scrutiny. That way, it could force every major tech company to rethink how they invest in mission-driven AI labs.

The story took a new turn on Monday morning when Microsoft and OpenAI announced a major amendment to their relationship – loosening the terms of their alliance and, perhaps not coincidentally, showing that their fortunes are not as equal as they used to be.

Microsoft Defense: In short, the company says that it was kept in the dark, that it invested as a commercial partner, which was never informed by OpenAI about any donation limits associated with Musk’s donations or any duties that the company owed to the founder of Tesla and SpaceX.

Former OpenAI CTO Mira Murati appeared to back that up in her deposition, testifying that she didn’t tell anyone at Microsoft about those restrictions. In a filing over the weekend, Microsoft lawyers flagged a discrepancy: Murati’s answer to that question was not in the official filing. It was audible on the video recording, but not on the written record.

Microsoft has also pointed to its work with Musk’s AI company, xAI, as evidence of its neutrality – arguing in court proceedings that hosting Grok’s XAI model on Azure proves it is merely a platform for competing AI models, not an actor part of the OpenAI revolution.

Microsoft’s clean path to victory, however, may be a process. The company argues that Musk’s claims are barred by the statute of limitations, and its primary evidence is his own words.

In a September 2020 tweet, Musk publicly announced that “OpenAI has been taken over by Microsoft.” If Microsoft can convince a judge that Musk knew about its involvement more than three years before he filed the lawsuit, the multibillion-dollar exposure disappears entirely.

The smoking gun? Musk’s lawyers will point to an internal Microsoft email from March 2018 in which Microsoft’s CTO raised this very question that will come before the judge.

Writing to Nadella before the call with Altman, Scott commented on OpenAI’s commercial transition: “I wonder if OpenAI’s major contributors are aware of these plans? [machine learning] talent so that they can go and build a closed area, it will be profitable on its back.

Microsoft continued to invest billions anyway.

It’s one of many behind-the-scenes emails revealed so far in the case, including an internal Microsoft exchange that shows Nadella and other executives weighing in on the OpenAI board during the crisis that briefly ousted Altman as CEO in November 2023.

When Musk’s attorneys confronted Nadella about Scott’s email in writing and asked if he shared those concerns, the Microsoft CEO deflected: “I think the nonprofit board of OpenAI is deciding what’s the best way for them to accomplish their mission.”

Nadella also said he did not recall discussing Scott’s concerns directly with Altman.

Microsoft says Scott’s email shows diligence, not guilt: Scott asked the right questions, OpenAI’s board gave contractual assurances that its agreements “would not interfere with any rights of third parties,” and Microsoft had the legal right to rely on those proposals.

The backstory: Musk founded OpenAI in 2015 as a non-profit organization dedicated to the safe development of AI, donating tens of millions of dollars before leaving the board in 2018. He filed a lawsuit in late 2024, alleging that Altman and others turned OpenAI into a for-profit business, betraying the mission they helped build and enriching the investors themselves.

What’s next: Speaking to prospective jurors this morning, Judge Gonzalez Rogers said he expects the case to wrap up on May 21 – which includes about three weeks of testimony followed by deliberations, and nine jurors to decide the case. If the jury finds for Musk, the jury will then decide in a separate proceeding how much Microsoft and OpenAI must pay.

Related: Microsoft-OpenAI files: Documents revealing the facts of the AI ​​alliance