From Seattle's own, GeekWire (also serving Redmond), January 20:
The launch of the AI lab that would redefine Microsoft caught the tech giant by surprise.
“Did we get called to participate?” Satya Nadella wrote to his team on Dec. 12, 2015, hours after OpenAI announced its founding. “AWS seems to have sneaked in there.”
Nadella had been Microsoft CEO for less than two years. Azure, the company’s cloud platform, was five years old and chasing Amazon Web Services for market share. And now AWS had been listed as a donor in the “Introducing OpenAI” post. Microsoft wasn’t in the mix.
In the internal message, which hasn’t been previously reported, Nadella wondered how the new AI nonprofit could remain truly “open” if it was tied only to Amazon’s cloud.
Within months, Microsoft was courting OpenAI. Within four years, it would invest $1 billion, adding more than $12 billion in subsequent rounds. Within a decade, the relationship would culminate in a $250 billion spending commitment for Microsoft’s cloud and a 27% equity stake in one of the most valuable startups in history.
New court filings offer an inside look at one of the most consequential relationships in tech. Previously undisclosed emails, messages, slide decks, reports, and deposition transcripts reveal how Microsoft pursued, rebuffed and backed OpenAI at various moments over the past decade, ultimately shaping the course of the lab that launched the generative AI era.
More broadly, they show how Nadella and Microsoft’s senior leadership team rally in a crisis, maneuver against rivals such as Google and Amazon, and talk about deals in private.
For this story, GeekWire dug through more than 200 documents, many of them made public Friday in Elon Musk’s ongoing suit accusing OpenAI and its CEO Sam Altman of abandoning the nonprofit mission. Microsoft is also a defendant. Musk, who was an OpenAI co-founder, is seeking up to $134 billion in damages. A jury trial is scheduled for this spring.
OpenAI has disputed Musk’s account of the company’s origins. In a blog post last week, the company said Musk agreed in 2017 that a for-profit structure was necessary, and that negotiations ended only when OpenAI refused to give him full control.
The recently disclosed records show that Microsoft’s own leadership anticipated the possibility of such a dispute. In March 2018, after learning of OpenAI’s plans to launch a commercial arm, Microsoft CTO Kevin Scott sent Nadella and others an email offering his thoughts.
“I wonder if the big OpenAI donors are aware of these plans?” Scott wrote. “Ideologically, I can’t imagine that they funded an open effort to concentrate ML [machine learning] talent so that they could then go build a closed, for profit thing on its back.”
The latest round of documents, filed as exhibits in Musk’s lawsuit, represents a partial record selected to support his claims in the case. Microsoft declined to comment.
Elon helps Microsoft win OpenAI from Amazon
Microsoft’s relationship with OpenAI has been one of its key strategic advantages in the cloud. But the behind-the-scenes emails make it clear that Amazon was actually there first.
According to an internal Microsoft slide deck from August 2016, included in recent filings, OpenAI was running its research on AWS as part of a deal that gave it $50 million in computing for $10 million in committed funds. The contract was up for renewal in September 2016.
Microsoft wanted in. Nadella reached out to Altman, looking for a way to work together.
In late August, the filings show, Altman emailed Musk about a new deal with Microsoft: “I have negotiated a $50 million compute donation from them over the next 3 years!” he wrote. “Do you have any reason not to like them, or care about us switching over from Amazon?”
Musk, co-chair of OpenAI at the time, gave his blessing to the Microsoft deal in his unique way, starting with a swipe at Amazon founder Jeff Bezos: “I think Jeff is a bit of a tool and Satya is not, so I slightly prefer Microsoft, but I hate their marketing dept,” Musk wrote.
He asked Altman what happened to Amazon.
Altman responded, “Amazon started really dicking us around on the T+C [terms and conditions], especially on marketing commits. … And their offering wasn’t that good technically anyway.”....
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