Microsoft Looking to Pursue an Open Relationship With OpenAI

The relationship between Microsoft and OpenAI used to be mutually beneficial. Microsoft invested billions of dollars in this AI startup in exchange for early access to its cutting-edge models, which are now integrated into Microsoft’s productivity software. However, recent reports show that Microsoft is looking to add more models, developed by companies other than OpenAI, to its 365 Copilot product. According to Reuters, Microsoft believes that OpenAI’s GPT-4 model is too expensive and slow to meet the needs of its enterprise customers. Copilot 365 is an AI assistant integrated into Microsoft’s productivity apps, like Word and PowerPoint, designed to handle company data and offer various functions, such as quickly finding information, generating lists of the most profitable departments, or instantly summarizing meetings and emails.

Even though Copilot 365 is meant to offer these functions, customers and insiders are still unhappy with its performance. According to Business Insider, anonymous Microsoft employees described the tools as "bad" and "full of gimmicks," with 75% of the time not working as expected. On the customer side, a survey by Gartner of 123 IT leaders found that only four thought Copilot was highly valuable to their company. Additionally, some customers said that 365 Copilot is too expensive. OpenAI’s ChatGPT is a general-purpose model, with a large amount of training data, high running costs, and slower speeds, which is why most models offer "lightweight" versions to reduce the computing load. Microsoft is now training its own smaller models, like Phi-4, and plans to customize other open-source models to improve the speed and efficiency of 365 Copilot.

In a way, Microsoft’s move to reduce its reliance on OpenAI makes sense. If AI is truly going to become the next big change in computing, relying on one independent company for core technology might not be the best approach. Microsoft has already invested billions in OpenAI and will receive 75% of the profits before it can get its return on investment, even though it will still own a large share of the company. This way, Microsoft can build its own internal models while also maintaining the value of its investment as OpenAI continues to develop. While OpenAI is currently in the lead, some skeptics believe we haven’t yet seen the true winner of the AI race, much like how many search engines from the 1990s were eventually surpassed by Google. Microsoft’s strategy of diversification is smart.