Microsoft Executives Expressed Concerns About OpenAI Partnership in 2017 and 2018

Court documents released this week from the ongoing Musk v. Altman trial show communications between Microsoft executives about a potential partnership with OpenAI in 2017 and 2018. OpenAI was then experimenting with AI-powered gaming bots, including one that defeated a Dota 2 professional player.

Shortly after that demonstration in the summer of 2017, OpenAI CEO Sam Altman responded to an email from Microsoft CEO Satya Nadella with a proposal for a larger collaboration. OpenAI sought substantial compute resources to expand the Dota 2 project, estimating a need for resources equivalent to $300 million at Azure list prices.

The request initially concerned some Microsoft executives. Jason Zander, then head of Azure, wrote in an August 2017 email that the numbers would require Microsoft to generate more than $500 million in incremental revenue directly from the deal. Several months later, Altman offered an alternative that included a partnership with Xbox around gaming and sharing technology and intellectual property in exchange for expanded support for the Dota research.

The Xbox team expressed interest in exploring collaboration but could not commit to the research costs on its own. In January 2018, Microsoft CTO Kevin Scott emailed Nadella about the proposal. Scott said he was uncertain what Microsoft would gain from the arrangement or how the Dota efforts would benefit the company.

Scott also raised the possibility of negative consequences if Microsoft declined to provide funding. "I guess the other thing to think about here is the PR downside of us not funding them, and having them storm off to Amazon in a huff and shit-talk us and Azure on the way out," Scott wrote.