Satya Nadella reveals Microsoft's $25B plan to absorb OpenAI team after Sam Altman firing
Microsoft CEO Satya Nadella revealed in court that Microsoft prepared a $25 billion backup plan to absorb Sam Altman, Greg Brockman, and OpenAI employees after Altman's sudden firing in November 2023.
After Sam Altman was suddenly fired from OpenAI on November 17, 2023, Microsoft was ready to quickly absorb OpenAI’s top leadership and talent into a Microsoft-controlled organisation, Microsoft CEO Satya Nadella revealed during court testimony on Monday. Nadella’s statement highlighted how important OpenAI was to Microsoft’s AI strategy and how urgently Microsoft moved to protect its interests during the leadership turmoil. Nadella took the witness stand on the final day of testimony in the Elon Musk vs OpenAI trial in federal court in Oakland, California.
He revealed that Microsoft reacted almost immediately by preparing a backup plan. Within just 24 hours, Microsoft had completed the legal paperwork to create a new subsidiary that could hire Altman, Greg Brockman, and potentially many other OpenAI employees if they chose to leave the company.
Microsoft estimated $25 billion cost
In the tech industry, especially in AI, compensation packages are heavily tied to equity and future company value. Convincing OpenAI employees to move would have required Microsoft to offer extremely expensive packages. Nadella revealed that Microsoft estimated it would cost around $25 billion to fully bring Sam Altman, his leadership team, and a large number of OpenAI employees into Microsoft while matching the salaries, stock compensation, and equity they already had or expected at OpenAI.
However, the plan was never carried out because Altman was later reinstated as OpenAI CEO. Once he returned and most employees stayed at OpenAI, Microsoft no longer needed to activate the alternative arrangement.
Nadella called Altman’s firing “amateurish”
Nadella also highlighted how confusing and sudden the firing appeared even to Microsoft, despite its deep involvement with OpenAI. Nadella called the firing of Sam Altman “amateurish.” During his testimony, Nadella said that even though Microsoft was OpenAI’s biggest investor and closest business partner, the board never properly explained why Altman was fired.
Nadella said his immediate concern was to understand whether there had been something serious involved, such as financial misconduct, fraud, security concerns, or ethical violations. However, according to his testimony, nobody gave Microsoft a clear answer. The only public explanation from OpenAI’s board was that Altman had not been “consistently candid” in his communications with them, a vague phrase that many people at the time felt did not justify such a dramatic decision.
Microsoft’s influence over OpenAI board
Nadella’s testimony also explained the power struggle that happened after Sam Altman was reinstated at OpenAI following the November 2023 leadership crisis. After Altman returned, OpenAI planned to rebuild or “reconstitute” its board of directors, and Microsoft — as OpenAI’s biggest investor and closest commercial partner — suggested 13 to 14 people it believed could serve on the new board. However, none of Microsoft’s proposed candidates were initially selected.
During testimony, Nadella admitted that Microsoft had no formal power to force the nonprofit OpenAI board to accept its recommendations. When asked what Microsoft could do if the board ignored its suggestions, he simply replied, “None,” highlighting that despite Microsoft’s multibillion-dollar investment, it did not directly control OpenAI’s governance structure.
At the same time, Nadella revealed that Microsoft did try to influence who joined the board by objecting to certain candidates. He said he opposed Diane Greene because of her connections to Google and opposed Bing Gordon because of his ties to Amazon. This suggested Microsoft was concerned about competitors gaining influence inside OpenAI.
Elon Musk’s legal team has claimed that Microsoft was attempting to shape OpenAI’s governance in ways that benefited Microsoft’s own business interests and strengthened its influence over the company.
OpenAI explored Anthropic merger talks
Ilya Sutskever, co-founder and former chief scientist of OpenAI, also testified under cross-examination. He said OpenAI’s board explored drastic backup options to stabilise the organisation during the crisis. One of those options was reportedly holding discussions with Anthropic, a major rival AI startup, about the possibility of some kind of merger or partnership.
Sutskever said he was not in favour of the idea of OpenAI combining with Anthropic, adding that he was “not excited” about the proposal.
Apart from Microsoft CEO Satya Nadella’s testimony, several other Microsoft executives also took the witness stand to testify about Microsoft’s investment in OpenAI.