Just a day after reports that Microsoft is planning the future without Openai, Reuters revealed on Friday that Redmond-based Tech Giant, a leading Openai investor, has begun testing models for Xai, Meta and Deepseek.
“Redmond, a leading supporter of the Open, based in Redmond, Washington, has begun testing models for Xai, Meta and Deepseek.
Microsoft is developing an in-house AI inference model
In addition to testing the new AI models, the report added that Microsoft is also developing its own AI inference model. These models could be offered to developers as alternatives to Openai’s technology, the report said.
“Microsoft is developing an in-house artificial intelligence inference model to compete with OpenAI and may sell it to developers. We report on Friday, citing people involved in this initiative.”
The move shows efforts to reduce Microsoft’s dependence on Openai despite the early partnerships that positioned the company ahead of its rivals in the AI space.
In December, Reuters reported that Microsoft is working to integrate both internal and third-party AI models into Microsoft 365 Copilot. This shift is aimed at expanding AI capabilities beyond Openai’s technology and managing costs.
When 365 co-pilots were introduced in 2023, an important selling point was integration with Openai’s GPT-4 model. However, the information now reports that Microsoft’s AI division, led by Mustafa Suleyman, has trained a set of models called MAI. These models reportedly function on par with Openai and the major models of humanity in widely used benchmarks.
Microsoft is developing inference models using the Chain of Tell technique to allow AI to break down complex problems into intermediate steps before generating answers. With this approach, Microsoft’s model could compete directly with Openai.
Suleyman’s team has already experimented with using MAI models in place of Openai’s technology at Copilot. According to the report, these models are significantly larger than Microsoft’s previous PHI models.
Microsoft is exploring the possibility of making the MAI model available as an API later this year. This allows developers to integrate them into their own applications.
This is not a new idea within Microsoft. In December 2024, Reuters reported that the company is beginning to speed up things and reduce costs by integrating internal models such as the PHI-4 into Microsoft 365 Copilot. The partnership with Openai is advantageous, and Microsoft has gained a share of revenue, but not without tension. Openai projected a $5 billion loss in 2024, flagged by the New York Times, but reinforced Microsoft’s desire to have its own AI playbook. Thuleman’s employment was a clear sign of that shift.
Will Microsoft replace Openai’s ChatGpt with Xai’s Grok?
Suleyman’s team is testing alternatives for companies like Xai, Deepseek and Meta, but today’s online chatter reflects a combination of skepticism and conspiracy. Some people question whether Microsoft will really break free if Openai technology is so embedded in its ecosystem.
If Microsoft pulls this off, the benefits are clear. It’s an opportunity to wager your own position in a competitive market, cheaper and faster AI services. But between contractual obligations, technical dependencies, and Openai’s continued innovation, Suleyman’s mission is a longer grind than a quick victory. His team is in motion. One model swap at a time. Can Microsoft completely separate herself from Openai? That’s a billion dollar question.
What does this mean for Openai and the AI industry?
Microsoft Testing Openai alternatives show a significant change in AI. Given the deep investment in Openai, this move could shake the industry.
In the case of Openai, it raises questions about stability and dependence on a single major supporter. For Microsoft, it’s a way to gain greater control over AI strategies and reduce costs.
Some view this as a logical step. Companies spread risk rather than relying too much on one provider. Others may view it as a sign that the Microsoft-Openai partnership is not as solid as it once was.
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