Microsoft develops in-house AI models to rival OpenAI’s technology

Photo: Reuters

Microsoft has created its own artificial intelligence (AI) models, which it believes can compete with top AI companies, including OpenAI, according to a source familiar with the matter.

The new AI models, known as MAI, have recently been tested, and the results suggest that they are as advanced as some of the best AI models available today. This includes AI systems developed by OpenAI and Anthropic. Microsoft has been experimenting with these models for different uses, such as improving its Copilot AI assistants. Copilot is designed to help users by answering questions, making suggestions for documents, and assisting in conference calls.

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In addition to MAI, Microsoft is also working on “reasoning models.” These models are designed to handle more difficult questions and solve problems in a way that feels more human-like. Other big tech companies, including OpenAI, Anthropic, and Google’s parent company, Alphabet, are also working on similar AI systems. Last month, Microsoft integrated OpenAI’s new o1 reasoning model into its Copilot products.

A Microsoft spokesperson said, “We have always used a mix of different AI models. This includes our strong partnership with OpenAI, as well as models from Microsoft AI and open-source models.”

Microsoft’s Shift in AI Strategy

Microsoft has invested around $13 billion in OpenAI and has used OpenAI’s technology to power many of its AI products. However, the company’s work on MAI suggests that it is preparing to rely less on OpenAI in the future. The relationship between the two companies has been widely discussed in the tech industry.

Recently, Microsoft and OpenAI renegotiated their agreement. In January, they decided that OpenAI could use cloud servers from other companies, as long as Microsoft didn’t want the business itself. Their deal is set to continue until 2030.

OpenAI did not provide any comments on the matter. However, Microsoft’s Chief Financial Officer, Amy Hood, spoke at a Morgan Stanley conference earlier this week. She said, “Both Microsoft and OpenAI succeed when each of us does well. We are planning for the next 10 or 20 years, which is important for both of us.”

Exploring Other AI Options

Microsoft already has a set of smaller AI models called Phi, which it has built in-house. It also offers AI models from different companies. According to reports, Microsoft has tested AI models from Anthropic, DeepSeek, Meta (formerly Facebook), and Elon Musk’s xAI to see how they could support Copilot.

Hood also emphasized that Microsoft values its partnership with OpenAI but wants to ensure there are other AI options available. She said, “We are proud to have OpenAI’s top models. But we are also developing our own AI models to provide more choices.”

This move shows that while Microsoft is still deeply connected with OpenAI, it is also working on its own AI technologies to stay competitive in the growing AI market.

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