Elon Musk has been sparring with OpenAI publicly for a while, but he’s now getting OpenAI’s investors involved as well.
Elon Musk has told Microsoft CEO Satya Nadella that OpenAI — in which Microsoft is the largest investor — will eat Microsoft alive. Nadella was announcing how Microsoft would integrate its offerings with the newly-launched GPT-5.
“Today, GPT-5 launches across our platforms, including Microsoft 365 Copilot, Copilot, GitHub Copilot, and Azure AI Foundry. It’s the most capable model yet from our partners at OpenAI, bringing powerful new advances in reasoning, coding, and chat, all trained on Azure. It’s hard to believe it’s only been two and a half years since,” he said.
“Sam Altman joined us in Redmond to show the world GPT-4 for the first time in Bing, and it’s incredible to see how far we’ve come since that moment. The pace of progress is only accelerating, and I can’t wait to see what developers, enterprises, and consumers will do with this latest breakthrough,” he added.
The post caught the attention of Elon Musk, who replied with a simple prediction. “OpenAI is going to eat Microsoft alive,” he said.
But Nadella was quick to respond with a post of his own. “People have been trying for 50 years and that’s the fun of it! Each day you learn something new, and innovate, partner, and compete. Excited for Grok 4 on Azure and looking forward to Grok 5,” he said.
Musk, OpenAI, and Microsoft do have a complicated history. Musk was the co-founder of OpenAI and had bankrolled much of OpenAI when it was founded as a non-profit in 2015. Around 2017, Musk felt that OpenAI wouldn’t succeed as a non-profit, and wanted it to be merged into Tesla. When the other co-founders didn’t agree, he stopped funding OpenAI, and dissociated himself from the company. At that point, Sam Altman approached Microsoft, which put $1 billion into OpenAI in 2019.
But Microsoft and OpenAI don’t have a traditional investment relationship. OpenAI has a for-profit arm and a non-profit arm, and Microsoft owns 49 percent of the for-profit arm. Microsoft gets access to OpenAI’s technologies, while also providing the company with compute infrastructure. But this relationship comes with a rider — a clause in their agreement says that if OpenAI were to achieve AGI, Microsoft would lose access to OpenAI’s most advanced technologies. As such, even after being its biggest investor, Microsoft wouldn’t stand to gain from any AGI-level technologies that OpenAI creates.
This clause, among other issues, has been a bone of contention between the two companies. It’s been reported that the two companies don’t fully agree on the definition of AGI. There have been other times when tensions between the two companies have boiled over — Microsoft and OpenAI couldn’t agree to the terms of the deal through which OpenAI was acquiring Windsurf, and that caused the deal to never get closed, and Windsurf was eventually acquired by Google and Cognition for parts.
Musk seemed to be hinting at these tensions when he told Nadella that OpenAI would eat Microsoft alive. Most of OpenAI’s upside likely stems from it achieving AGI, but if Microsoft does get access to Microsoft’s technologies once that happens, it could make Microsoft’s investment returns much worse than they could’ve been. Also, reliance on OpenAI likely means that Microsoft isn’t pushing as hard on its own AI technologies — it is already able to access OpenAI’s models in its products. But if the relationship were to end, Microsoft could be left in the lurch, much behind its other competitors. It remains to be seen if Musk’s warnings play out, but it seems that Nadella seems cognizant of these issues, and is likely preparing the ground to protect Microsoft’s interests in the coming years.