In yet another sign of Microsoft ditching its exclusivity with OpenAI — we saw one earlier in the cloud space — the Redmond software behemoth is developing its own artificial intelligence (AI) reasoning models, internally known as ‘MAI,’ to reduce dependency on OpenAI and to enhance its AI capabilities. According to a report by The Information, these models are designed to perform tasks that require complex reasoning and problem-solving, aiming to match or surpass the performance of leading models from the AI trendsetter – OpenAI.
Microsoft is experimenting with integrating these MAI models into its products, such as Microsoft 365 Copilot. The company is also considering releasing them as an application programming interface (API) for external developers later this year. This means developers could incorporate Microsoft’s AI capabilities into their own applications, potentially reducing costs and increasing flexibility compared to relying solely on OpenAI’s technology.
The move isn’t surprising, as earlier in December 2024, a few reports suggested that despite investing $13.75 billion in OpenAI since 2019, Microsoft is reportedly exploring alternatives to the ChatGPT maker’s AI model, particularly for its 365 Copilot.
In the early days, Microsoft 365 Copilot – launched in 2023 – aggressively highlighted the use of OpenAI’s GPT-4 model. But now the scenario seems to be changing, possibly due to three main reasons: first, to avoid monopoly or exclusive dependency; second, to reduce costs; and third, to improve speed.
Coming back to the latest development, this new initiative is led by Microsoft’s AI division under Mustafa Suleyman, which has completed training a family of models that perform nearly as well as leading models from OpenAI. The team is training reasoning models using chain-of-thought techniques, a reasoning process that generates answers with intermediate reasoning abilities when solving complex problems.
Interestingly, the recent report also indicates that Microsoft has begun testing AI models from xAI, Meta, and DeepSeek as potential replacements for OpenAI’s technology within Copilot.
The development comes at a time when last month the company introduced Copilot AI features to its Microsoft 365 suite for Personal and Family subscription plans. Previously, these AI capabilities were available exclusively through a separate Copilot Pro subscription at an additional cost of $20 per month.
Earlier this year, Microsoft announced a change in its partnership with OpenAI, moving away from its previous exclusive role as the cloud provider for OpenAI’s computing needs. Under the revised agreement, Microsoft retains a ‘right of first refusal’ (ROFR), giving it the first opportunity to provide cloud resources to OpenAI. However, OpenAI now has the option to seek services from other cloud providers, such as Oracle.
The timing of this shift in the Microsoft-OpenAI relationship coincides with the reveal of the Stargate Project. This joint venture, involving OpenAI, Oracle, SoftBank, and Nvidia, is expected to inject up to $500 billion into developing the necessary infrastructure to support next-gen AI models in the United States. At the same time, Microsoft itself plans to invest $80 billion in AI-focused data centers, and cloud in fiscal year 2025, including $3 billion in India.
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