Court filings from Elon Musk's lawsuit against Sam Altman have revealed a trove of internal Microsoft emails from 2017 and 2018 — including some from CEO Satya Nadella — that paint a picture of a company deeply skeptical of OpenAI before eventually pouring billions into it.
In 2016, after Musk brokered an introduction, Microsoft offered OpenAI a heavily discounted $60 million credit on its Azure cloud. OpenAI promptly burned through twice that amount. In August 2017, Nadella emailed congratulations after OpenAI won a game-playing AI competition. Ten days later, Altman replied asking for $300 million in compute power, calling it "the most impressive result in AI history."
Nadella forwarded the request to four deputies. The feedback was ice cold: the AI team "doesn't see the value" in working together; the research team thought its own work was "more advanced"; PR was uncomfortable backing an organization that promotes "machine beats human." Executive VP Jason Zander summed it up: Azure could get some free publicity from the Musk and Altman names, but "we don't want to take a huge loss."
In January 2018, Nadella polled 15 executives again. He was blunt: "I can't see what research they're doing, and I don't know how it benefits us." But he acknowledged that "their push on AI exceeds all our internal teams and external partners." CTO Kevin Scott pushed back: "I highly doubt AGI is imminent. They see us as a bucket of undifferentiated GPUs."
But then Scott named the fear that everyone actually shared: If Microsoft stopped feeding OpenAI, "they'll get angry, go to Amazon, and badmouth Azure on the way out." Zander agreed, warning that the worst-case scenario is OpenAI moves to AWS, builds something huge, and a competitor gets to use it. Microsoft ultimately told Altman that no internal team was willing to sponsor OpenAI.
About 18 months later, OpenAI established a for-profit subsidiary. Microsoft invested $1 billion, and over the next four years added another $12 billion, bringing the total to $13 billion.
In an ironic twist, Microsoft's worst nightmare came true anyway. In recent months, OpenAI signed a $138 billion cloud deal with Amazon, which also committed to invest between $15 billion and $50 billion in the startup.
Nadella is scheduled to testify in court next Monday.