Microsoft CEO Satya Nadella (R) greets OpenAI CEO Sam Altman during the OpenAI DevDay event

(Justin Sullivan/Getty Images)

Emails show Microsoft wasn’t impressed by OpenAI’s early work, but wanted to keep it from Amazon

OpenAI wanted further Azure computing discounts, but Microsoft didn’t think it was on the verge of a breakthrough.

5/8/26 12:01PM

Updated 5/15/26 11:29AM

The Musk v. Altman trial has revealed that key executives at Microsoft doubted OpenAI’s ability to deliver immediate breakthroughs, giving us a look into how the software behemoth viewed the AI upstart in its earliest days.

An email thread released yesterday as evidence from the trial unfolding in Oakland showed execs’ skepticism as they weighed massive further investments in the company. The thread — spanning August 2017 through January 2018 — included a large group of Microsoft executives, including CEO Satya Nadella, CFO Amy Hood, and at least one executive on vacation with his family in Antarctica. It shines some light on the internal debate surrounding a request from OpenAI CEO Sam Altman to offer up huge discounts for Azure AI computing resources, worth hundreds of millions of dollars.

Years before ChatGPT made its debut, OpenAI was expending significant resources working on an AI model that could beat competitive esports players in the video game “Dota 2.”

Microsoft had given OpenAI a huge discount on Azure computing for the project starting in 2016, in which OpenAI paid Microsoft $10 million for $60 million worth of computing. Altman emailed Nadella in August 2017 and said they needed a lot more:

“I think it will lead to major new breakthroughs in Al but will require huge amounts of compute, probably something like $300MM at Azure list prices. We could figure out how to fund some of it but not that much.”

Altman pitched a joint team to continue the work on “Dota 2,” with the new goal of competing in a match with two five-player teams. The Microsoft executives noted how fast the OpenAI team blew through their discounted computing, and cast doubt on whether the company was close to a breakthrough.

Nadella wrote on the group:

“Overall I can’t tell what research they are doing and how if shared with us it could help us get ahead. From what Elon is telling everyone... he feels Open Al is at verge of some big AGI breakthroughs. I know they are working t o push some NPU designs etc. They clearly are pushing Al at a level none of our first party or third parties are.”

Microsoft executive Harry Shum wrote:

“I visited OpenAl about a year ago, and was not able to see any immediate breakthrough in AGI.”

The executives thought the work was promising, but OpenAI was just using their GPUs in the cloud, and Microsoft wasn’t getting any access to the underlaying technology, nor any huge public relations benefit from the partnership.

But the group was worried that if Microsoft didn’t continue supporting the scrappy Elon Musk-backed startup, it might push them into the hands of their competitors — like Amazon.

Microsoft executive Jason Zander wrote:

“My worst case scenario is having them ditch Azure for AWS, as Kevin says bad-mouth then land with some big new innovation that is shared with our competition.”

Less than five years after that email, OpenAI would release ChatGPT, and Microsoft would invest billions in the company.

Correction: A previous version of this story incorrectly attributed a quoted email to Eric Horvitz, when it was actually from Jason Zander.

Chris Stokel-Walker

Bot bias

6/17/26

Companies are getting AI chatbots to smear their competitors

The race to influence AI chatbots is leading to some companies to adopt shady competitive tactics.

Tom Jones6/17/26

Prediction markets have, predictably, been given a boost by the summer of sports

Major platforms like Kalshi and Polymarket have seen huge upticks in users of late, thanks in no small part to what’s felt like a recent sporting smorgasbord, with major competitions across hockey, basketball, and soccer soaking up fans’ time (and spending, clearly) at the outset of summer.

While gaming industry groups may not like it, there’s been a huge change in the methods people are using to put money on the big games, with everyone from fortunate NYC bar owners, to a far less fortunate Spanish supporter, turning to prediction markets to try and turn their sports know-how into cold, hard cash.

According to a new report from Adam Blacker for apptopia, that shift might have been even more seismic than imagined in the wake of the NBA and NHL finals and around the 2026 World Cup kicking off.

2026 World Cup Reverses Seasonal Lull for Sports Betting Apps

According to a new report from Adam Blacker for apptopia, that shift might have been even more seismic than imagined in the wake of the NBA and NHL finals and around the 2026 World Cup kicking off.

South by Southwest Conference and Festivals

Gold Tesla Cybercabs are piling up, but they’re not picking up passengers yet

Low-volume production started in April. Now people are noticing them more and more in the wild.

Rani Molla6/15/26

Millie Giles

TAKING ACCOUNTS

6/15/26

Britain announces social media ban for under-16s starting early 2027

The UK government plans to use the same model for the restrictions as Australia — but how successful has that case study been so far?

UK Prime Minister Announces Under-16s Social Media Ban

Jon Keegan6/15/26

Anthropic pulls Fable and Mythos access worldwide after Trump administration bars their use by foreign nationals

Only days after releasing two versions of its next-gen AI model, Anthropic has disabled them for users worldwide.

Anthropic says it received a Friday night order from the Trump administration to suspend access to the models for any foreign national (anywhere in the world) — a group that included some Anthropic employees. In response, the company turned off access to everyone.

Last week, the company released to the public its much-anticipated Claude Fable 5 model (and its restricted version Claude Mythos 5, which is still being tested with trusted partners). Anthropic said in a blog post announcing the action that officials cited national security concerns with the new models, while offering few specific details.

The post said that the government gave the company “verbal evidence of a potential narrow, non-universal jailbreak” of the public Fable 5 model. A jailbreak is a means by which users can evade restrictions built into the code to unlock prohibited functionality. Anthropic downplayed the significance of the attack, and said other major models, such as OpenAI’s GPT-5.5, could also be affected by the technique described.

Fears of these first Mythos-class models being misused are running high, after Anthropic warned the cybersecurity world in May that the advanced cyber capabilities of Mythos have rapidly discovered thousands of vulnerabilities in ubiquitous software, leading to the decision to restrict the full version of the model to a close group of trusted partners for testing.

This morning, Axios reported that Anthropic technical staff have flown to Washington to meet with White House officials to resolve the issue.

The Wall Street Journal is reporting that the Trump administration’s decision to take action against Anthropic was prompted by discussions that Amazon CEO Andy Jassy had with officials, including Treasury Secretary Scott Bessent. According to the report, Amazon researchers said they had been able to evade some of Fable 5’s security restrictions using specific prompts. Amazon is a major investor in Anthropic.

Anthropic is currently suing the US government to fight the Pentagon’s blacklisting of the company on national security grounds.

Statement on the US government directive to suspend access to Fable 5 and Mythos 5