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Nadella Testimony Sharpens Focus on Microsoft's Role in OpenAI-Musk Showdown

• By John K. Waters
• 05/12/2026

Microsoft CEO Satya Nadella took center stage Monday in Elon Musk's civil lawsuit against OpenAI, offering jurors new insight into the partnership that transformed OpenAI from a nonprofit research lab into one of the most influential companies in artificial intelligence. His testimony focused heavily on Microsoft's investment, commercial agreements, and involvement during OpenAI's turbulent 2023 leadership crisis.

The appearance marked a pivotal moment in the closely watched federal trial between Musk, OpenAI, CEO Sam Altman, and other defendants. At the heart of the dispute is Musk's allegation that OpenAI abandoned the nonprofit mission on which it was founded in favor of a profit-driven business model closely aligned with Microsoft. OpenAI rejects those claims, arguing that its restructuring was necessary to secure the funding and computing resources required to compete in the rapidly escalating AI race.

Nadella was questioned about Microsoft’s relationship with OpenAI, its financial backing of the company, and the 2023 leadership crisis in which Altman was briefly removed before being reinstated. According to The Wall Street Journal, Nadella testified that Microsoft’s agreement gave it rights to OpenAI's intellectual property, not control over the company.

The distinction matters because Musk’s side has sought to portray Microsoft’s investment and commercial partnership as evidence that OpenAI drifted away from the charitable purpose that helped define its founding. Microsoft has invested heavily in OpenAI, and the partnership has made OpenAI’s models central to Microsoft products while giving the software giant a leading position in the generative AI race.

Nadella also testified about the turmoil surrounding Altman’s firing and reinstatement in 2023. The Wall Street Journal reported that Nadella said he was concerned at the time that Altman or members of his team might join a rival such as Google or start a competing company.

The trial has repeatedly returned to the same question: whether OpenAI’s structure evolved to support the development of advanced AI or violated the nonprofit commitments that attracted early backers, including Musk. AP reported that U.S. District Judge Yvonne Gonzalez Rogers has warned lawyers not to turn the proceedings into a broad trial over the dangers of artificial intelligence, even as testimony has touched on those risks.

Musk, who co-founded and helped fund OpenAI, has accused Altman, OpenAI President Greg Brockman, OpenAI, and Microsoft of misleading him as the organization moved from a nonprofit research lab toward a more profit-oriented structure. OpenAI has denied the allegations and said Musk had previously considered or supported for-profit options as the company sought the money and computing power needed to compete.

The courtroom has already heard from Musk, Brockman, former OpenAI board member Shivon Zilis, and other witnesses. Zilis, a former OpenAI board member and longtime Musk associate, testified last week and denied allegations that she secretly funneled information to Musk while serving on OpenAI’s board.

Brockman’s testimony focused in part on OpenAI’s mission, the company’s structure, and Musk’s role in its early evolution. AP reported that Brockman testified that OpenAI’s work was larger than any individual or corporate structure, while OpenAI has argued that Musk sought greater control over the company before leaving.

The trial began in Oakland federal court after a nine-person jury was selected on April 27. Theproceeding is scheduled to continue through late May, with closing arguments expected to begin Thursday, May 14.

Several major questions remain unresolved as the case moves toward its conclusion. The expected testimony from former OpenAI chief scientist Ilya Sutskever, Nadella, and Altman could shape the jury’s view of OpenAI’s internal governance, the 2023 Altman ouster, and whether the company’s evolution amounted to a betrayal of its founding commitments.

Because the case is civil, the jury will not decide guilt or innocence. Jurors will decide liability and compensation, while Gonzalez Rogers will determine any remedies if Musk prevails. Remedies sought by Musk have included changes to OpenAI’s structure and leadership, although it remains unclear what the court would order if he were to win.

For the AI industry, the trial has become more than a fight among Silicon Valley founders. It is testing how courts, investors, and juries understand the uneasy bargain behind frontier AI: nonprofit language, commercial capital, corporate partnerships, and the enormous costs of building systems that their creators say could reshape the global economy.