Nadella criticizes OpenAI’s board for ‘amateur city’ removal attempt

Microsoft CEO Satya Nadella didn’t mince words when asked about the November 2023 boardroom drama that nearly blew up the most important AI partnership on the planet. Testifying on May 12 in Elon Musk’s lawsuit against OpenAI, Nadella described the board’s attempt to fire Sam Altman as “amateur city.”

What Nadella actually said on the stand

Nadella’s testimony came as part of Musk’s ongoing legal challenge against OpenAI, which is being heard in US District Court. Musk alleges that OpenAI has strayed from its original nonprofit mission and pivoted toward profit maximization, largely through its deepening relationship with Microsoft.

On the stand, Nadella made clear that Microsoft’s interest in OpenAI was never about charity. The $13 billion partnership, which began with a $1 billion investment back in 2019, was designed to fuel cloud growth and AI integration across Microsoft’s product ecosystem.

But the more revealing moments came when Nadella discussed the Altman firing directly. He expressed concern over the lack of transparency surrounding the board’s decision. The initial justification, that Altman hadn’t been “consistently candid” with the board, struck Nadella as both vague and insufficient for a move of that magnitude.

Sam Altman was fired on November 17, 2023. Within days, the decision had essentially reversed itself. A massive employee backlash, with staff threatening to follow Altman out the door, forced the board’s hand. Altman was reinstated, and most of the board members who orchestrated the move were replaced.

The Musk angle

Nadella’s testimony also surfaced an interesting detail about the man behind the lawsuit. Despite Musk’s vocal criticism of the OpenAI-Microsoft partnership, Nadella stated that Musk never raised objections about it directly with him. This is notable because, as Nadella pointed out, Musk had his contact information.

Musk’s lawsuit centers on the claim that OpenAI was founded as a nonprofit with a mission to develop AI for the benefit of humanity, and that the organization’s increasingly commercial trajectory, particularly its partnership with Microsoft, represents a betrayal of those founding principles. Musk’s lawsuit was initiated in June 2024.

What this means for investors

AI governance, or the lack thereof, is becoming one of the defining themes of the tech sector. The 2023 Altman firing exposed how fragile the leadership structures behind the most consequential technology companies can be. A nonprofit board with no fiduciary duty to shareholders nearly torpedoed a $13 billion partnership over what amounted to interpersonal grievances dressed up as governance concerns.

The Musk lawsuit also raises questions about how AI companies structure their relationships with big tech partners. If OpenAI’s nonprofit status is legally challenged and the organization is forced to restructure, it could set precedents for how AI companies raise capital, distribute profits, and interact with the broader technology ecosystem.

The trial in US District Court is ongoing. Nadella’s testimony is just one piece of a much larger legal puzzle that will take months to resolve.

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