Musk vs. OpenAI Trial Week 3: Nadella Testifies, Altman Says Musk Wanted 90% Equity

The federal trial of Musk v. OpenAI entered its third week in Oakland, California on May 11, 2026. Microsoft CEO Satya Nadella took the stand that day, testifying that Elon Musk never raised concerns to him about Microsoft's $13 billion investment in OpenAI. Sam Altman took the stand May 12 and revealed under cross-examination that Musk wanted 90% of OpenAI's equity at the founding. The trial before Judge Yvonne Gonzalez Rogers is expected to conclude by May 21. At stake: up to $150 billion in damages, the unwinding of OpenAI's for-profit subsidiary, the removal of Altman and Greg Brockman from their roles, and the future of OpenAI's planned IPO at an $852 billion valuation.

This is the highest-stakes corporate governance trial in tech history, and it is happening in real time.

What the Case Is Actually About

Musk filed his original lawsuit in 2024, alleging that he was deceived into co-founding and funding OpenAI under the premise that it would remain a nonprofit AI safety research organization — and that Altman and Brockman then converted it into a for-profit entity that enriched themselves.

The original complaint contained 26 claims. By the time the case reached trial, Judge Gonzalez Rogers had narrowed it to two: breach of charitable trust and unjust enrichment. The other 24 claims were dismissed at summary judgment.

The breach of charitable trust claim is the core: Musk argues that OpenAI was established as a charitable organization for the public benefit — that the founding agreements created enforceable charitable trust obligations — and that the conversion to a for-profit subsidiary structure violated those obligations. If the court agrees, the for-profit subsidiary could be unwound.

The unjust enrichment claim is secondary but significant: even if the conversion was technically permissible, Altman, Brockman, and OpenAI were unjustly enriched at the expense of the charitable purpose Musk funded. The damages theory is based on the value transferred from the nonprofit to the for-profit — a number Musk's legal team puts at up to $150 billion based on OpenAI's current $852 billion valuation.

Satya Nadella's May 11 Testimony

Nadella's testimony was notable for what it revealed about Microsoft's awareness of and influence over OpenAI's governance.

On whether Musk raised concerns about the investment: Nadella testified that Musk never contacted him with concerns that Microsoft's investments violated any special terms or commitments to keep OpenAI a nonprofit. If Musk genuinely believed Microsoft's investment was improper, Nadella said, he never said so to Microsoft's CEO.

On OpenAI's independence: Nadella stated that OpenAI "retained its independence" through the deepening partnership, and that OpenAI "had all the rights and resources they always had." This is important because Musk's legal theory partly rests on the idea that Microsoft's investment enabled the for-profit conversion by providing the capital structure that made the nonprofit mission economically unnecessary.

On Altman's November 2023 firing: Nadella testified he was never given a full explanation for why the OpenAI board removed Altman in November 2023. He was "pulled out of a meeting" and informed of the decision. This is the first time Nadella has publicly said he was kept in the dark about the firing — significant given that Microsoft was by then already a $10+ billion investor in the company.

On board governance influence: Nadella revealed he voiced disapproval of potential board candidates Diane Greene (former Google Cloud CEO) and Bing Gordon (gaming executive) because of their connections to companies competing with Microsoft in AI. This is perhaps the most damaging testimony for Microsoft — it suggests that at least one of the world's largest OpenAI investors was attempting to influence OpenAI's board composition, which cuts against the "independence" framing.

Sam Altman's May 12 Testimony

Altman's cross-examination by Musk's attorney Steve Molo produced the trial's most quoted exchange.

On Musk's equity demands: Altman testified that "an early number that Mr. Musk threw out was that he should have 90 percent of the equity to start." This single sentence reframes the entire case. Musk has presented himself as a principled benefactor who funded an altruistic mission and was betrayed. Altman's account, if credited by the jury, is of a co-founder who initially wanted controlling equity — which is categorically different from altruism.

On Musk's intent toward OpenAI: Altman said "Mr. Musk did try to kill it" — referencing Musk's attempts to take over the company's leadership (Musk proposed making himself CEO in 2017, which the board rejected), his departure after that rejection, and his subsequent launch of xAI and efforts to recruit OpenAI researchers. Altman framed Musk's lawsuit as motivated by competition rather than principle.

On the nonprofit mission: Altman's core defense is that OpenAI had to build a commercial entity to raise the capital required to achieve the nonprofit's mission. The argument is essentially: you cannot build frontier AI on charitable donations alone, and the for-profit structure was a means to the nonprofit's ends, not a betrayal of them.

Musk's Own Testimony and the "Duped" Claim

Musk testified on April 28, the first day of trial. The substance:

Musk claims he was promised OpenAI would remain a nonprofit developing AI "for the benefit of humanity" and would publish its research. He says the for-profit conversion and the retention of GPT model weights as proprietary assets are direct violations of those promises.

Musk acknowledged he left OpenAI's board in 2018 — he said he was pushed out; OpenAI says he resigned after the board rejected his bid to become CEO. He acknowledged that after leaving, he launched xAI. Musk's attorney's framing is that he launched xAI only after being forced out by a board that was already moving toward commercialisation.

Under cross-examination, Musk acknowledged that he has publicly called for OpenAI to be shut down, that he has called Altman various names on social media, and that he made a $97 billion acquisition offer for OpenAI earlier in 2026 — which OpenAI rejected. The acquisition offer is legally relevant: Musk cannot claim he wants OpenAI to remain a nonprofit while simultaneously trying to acquire it for $97 billion in what would be a private takeover.

The OpenAI IPO and the $852 Billion Valuation

OpenAI is currently valued at approximately $852 billion based on its most recent private funding round. The company is reportedly planning an IPO that would be the largest tech public offering since Alibaba in 2014.

A Musk victory — particularly the unwinding of the for-profit subsidiary — would potentially block or delay the IPO. The for-profit entity (OpenAI LP, restructuring to OpenAI PBC) is the entity that would go public. If the court orders it unwound or restructured to genuinely subordinate commercial interests to the nonprofit mission, the IPO valuation narrative collapses.

The damages claim of up to $150 billion is not a number Musk would receive — the theory is that the $150 billion represents value that should be disgorged back to the nonprofit trust rather than flowing to equity holders and management.

Why Microsoft Is a Defendant

Microsoft invested $13 billion in OpenAI across multiple rounds beginning in 2019. Musk's legal theory includes Microsoft as an aider and abettor of the breach of charitable trust — the argument being that without Microsoft's capital, OpenAI could not have commercialised, and Microsoft therefore enabled the alleged trust breach.

Nadella's testimony attempting to distance Microsoft from board governance decisions while simultaneously revealing he objected to specific board candidates illustrates the tension in Microsoft's position: "we were just investors" is harder to maintain when the CEO was actively opining on board composition.

Separately from Musk's case, a class action antitrust suit from 11 consumers challenges Microsoft's exclusive cloud partnership with OpenAI as anticompetitive in the AI services market. That case is related but separate from Musk's suit.

What Happens After May 21

The trial closes around May 21. The advisory jury deliberates; Judge Gonzalez Rogers ultimately decides the case (this is an equity bench trial with an advisory jury, not a jury verdict that binds the judge).

If Musk wins on breach of charitable trust: the court could order structural remedies ranging from increased nonprofit board control over the for-profit to full unwinding of the commercial entity. The IPO would be in serious jeopardy.

If Musk loses: OpenAI proceeds with its for-profit conversion, the IPO timeline resumes, and Musk's leverage over OpenAI's future structure evaporates. Musk would likely appeal but would lose the ability to threaten the IPO with ongoing litigation risk.

The $150 billion damages number is almost certainly not what any judgment would produce even in a Musk win — courts rarely award full unjust enrichment theories at face value. But structural remedies (board composition, mission constraints on the commercial entity) could be deeply disruptive to OpenAI's commercial trajectory.

Key Takeaways

• Trial location and timeline: US District Court, Northern District of California, Oakland; began April 28, 2026; expected to close May 21; Judge Yvonne Gonzalez Rogers
• Two surviving claims: Breach of charitable trust + unjust enrichment; 24 of 26 original claims dismissed; Musk seeks up to $150B disgorged to nonprofit trust, removal of Altman and Brockman, unwinding of for-profit subsidiary
• Nadella testimony May 11: Musk never raised concerns about Microsoft investment; OpenAI "retained independence"; objected to specific board candidates (Diane Greene, Bing Gordon) — reveals governance influence; was not told why Altman was fired in November 2023
• Altman testimony May 12: Musk demanded 90% equity at founding; "Mr. Musk did try to kill it"; for-profit structure was necessary to fund the nonprofit mission, not a betrayal of it
• Musk's $97B acquisition offer: Musk simultaneously suing to preserve OpenAI as a nonprofit while making a $97B private takeover bid — cited as evidence of competitive motivation rather than principled concern
• IPO at stake: OpenAI valued at $852B; IPO plans contingent on maintaining for-profit structure; a structural remedy ordering nonprofit primacy would fundamentally alter the IPO narrative

For the OpenAI Daybreak cybersecurity platform announced during the same trial week, read OpenAI Daybreak: GPT-5.5-Cyber and Codex Security vs. Claude Mythos. For the xAI dissolution into SpaceXAI (relevant to Musk's competing AI ventures), read xAI Dissolved Into SpaceXAI: Musk Merges Grok and Colossus Into SpaceX.