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    Home » Microsoft and OpenAI: From partners to competitors
    08-02-microsoft
    08-02-microsoft
    AI

    Microsoft and OpenAI: From partners to competitors

    By Rae LiAugust 5, 2024No Comments3 Mins Read
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    • For the first time, Microsoft refers to OpenAI as a “competitor” in its SEC filing, despite their longstanding relationship and large investments which may reflect a strategic realignment under antitrust scrutiny.
    • While Microsoft and OpenAI are partners in some areas, Microsoft is actively developing its own AI division, such as hiring the co-founder of Inflection AI to lead a new AI division and investing in Microsoft Copilot to build an AI future independent of OpenAI.

    OUR TAKE
    Microsoft has repositioned its relationship with OpenAI in the face of antitrust scrutiny, treating the other as a competitor, signalling the complexity of the partnership and competitive relationship between the two. Despite its large investment and long-term relationship with OpenAI, Microsoft is also actively expanding its own AI domain by hiring the co-founders of Inflection AI and investing in Microsoft Copilot to ensure independent development and competitiveness in the AI field.

    -Rae Li, BTW reporter

    What happened

    Microsoft describes OpenAI as a “competitor” for the first time in a recent SEC filing, a move that can be related to the antitrust scrutiny it faces. Despite its $13 billion investment and longstanding relationship with OpenAI, Microsoft is now treating OpenAI as one of the companies it competes with in the AI space in its public filings. Microsoft’s annual 10K report lists OpenAI as a competitor alongside the likes of Anthropic, Amazon, and Meta, particularly in the search space, where Microsoft sees OpenAI as a competitor due to its launch of the SearchGPT feature.

    Microsoft’s statement can be an attempt to adjust the narrative of its relationship with OpenAI in response to scrutiny from regulators. For example, Microsoft recently agrees to relinquish its board observer seat at OpenAI, a follow-up to Microsoft CEO Satya Nadella’s offer of a position to Altman and other executives after the OpenAI board briefly fired CEO Sam Altman last autumn. However, Microsoft is not devoting all of its resources to OpenAI. In March, Microsoft hires Inflection AI co-founders Mustafa Suleyman and Karén Simonyan to lead its new AI division and is investing heavily in Microsoft Copilot to build an AI future separate from OpenAI.

    Also read: Microsoft’s Azure growth below estimates amid AI investment rises

    Also read: Microsoft sees 15% revenue rise in Q4, cloud and gaming lead

    Why it’s important

    Microsoft has changed its strategy in handling its relationship with OpenAI, especially in the context of the regulatory scrutiny it is facing. Microsoft’s statement that it views OpenAI as a competitor may foreshadow a future realignment of the company’s competitive strategy in the AI space. This shift reflects Microsoft’s sensitivity to potential antitrust issues and suggests that Microsoft is actively seeking to maintain independence and competitiveness within the AI space while maintaining a partnership.

    Microsoft’s diversification in the AI field shows its far-reaching consideration of future technology development. By hiring the co-founders of Inflection AI and investing in Microsoft Copilot, Microsoft is building an AI ecosystem independent of OpenAI. This strategy is an important signal for investors, competitors, and the tech industry as a whole.

    Amazon Microsoft OpenAi
    Rae Li

    Rae Li is an intern reporter at BTW Media covering IT infrastructure and Internet governance. She graduated from the University of Washington in Seattle. Send tips to rae.li@btw.media.

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