Microsoft and OpenAI have long maintained a collaborative relationship, with Microsoft investing billions into OpenAI in exchange for early access to cutting-edge AI models. This partnership has integrated OpenAI’s models, including GPT-4, into Microsoft’s suite of productivity tools like Word and PowerPoint, through the AI-powered 365 Copilot assistant.
However, recent reports from Reuters indicate that Microsoft may be broadening its AI horizons. The company is reportedly exploring the addition of alternative AI models to its 365 Copilot product, driven by concerns that OpenAI’s GPT-4 model is too costly and slow to meet the needs of enterprise clients.
365 Copilot is designed to streamline productivity by analyzing company data to generate insights, summarize meetings, and automate tasks. Despite these ambitions, customer feedback suggests mixed results. Business Insider recently reported that many Microsoft employees view the tools as underwhelming, with internal criticism labeling them “terrible” or “gimmicky.” Similarly, a Gartner survey of IT leaders revealed that only four out of 123 respondents found significant value in Copilot.
Cost is another factor causing friction. At $30 per month per user, some businesses feel the tool doesn’t justify its price point, especially when performance issues arise.
To address these challenges, Microsoft has been developing smaller, more efficient in-house models, such as Phi-4, and exploring the potential customization of open-weight models. The goal is to create faster, more cost-effective AI solutions tailored to enterprise needs.
By diversifying its AI portfolio, Microsoft hopes to reduce reliance on OpenAI while still benefiting from its investments. Microsoft’s agreement with OpenAI allows the company to claim 75% of profits until its investment is recouped, after which it will continue to hold significant equity in the startup.
This strategic shift mirrors broader trends in the tech industry, where companies are hedging bets on AI, recognizing that the race to dominate the market is far from over. Much like the early days of internet search engines, where Google emerged as a late but dominant player, the ultimate leader in AI remains uncertain. Microsoft’s efforts to cultivate its own AI technologies may position it to thrive regardless of how OpenAI’s trajectory unfolds.
