Microsoft is actively developing in-house artificial intelligence reasoning models to reduce reliance on OpenAI and strengthen its position in the AI race, according to a report by The Information. The tech giant is testing AI models from xAI, Meta, and DeepSeek as potential alternatives to OpenAI’s models, which currently power its AI-driven Copilot products.
A Shift Away from OpenAI
Microsoft has been one of OpenAI’s biggest backers, investing billions into the ChatGPT maker. However, its latest efforts suggest a diversification strategy, moving toward internal and third-party AI models to power Microsoft 365 Copilot and other AI-driven products.
According to the report, Microsoft’s AI division, led by Mustafa Suleyman, has developed and trained a new family of AI models, internally referred to as MAI. These models perform nearly as well as OpenAI’s GPT-4 and Anthropic’s Claude on widely accepted AI benchmarks.
Reuters had previously reported in December 2024 that Microsoft was exploring multiple AI models, both internal and external, to power Copilot—reducing dependence on OpenAI’s technology while cutting costs.
Advancing AI Reasoning Capabilities
A key area of focus for Microsoft’s new AI models is reasoning abilities, which allow AI to solve complex problems through logical chains of thought. These chain-of-thought reasoning models are expected to directly compete with OpenAI’s leading AI models, making them a potential alternative for Microsoft’s future AI-powered offerings.
Suleyman’s team is currently experimenting with swapping out OpenAI’s models in Copilot with the MAI models, which are significantly larger than Microsoft’s earlier Phi models.
A Potential New AI Product for Developers
Microsoft is also considering making its MAI models available to external developers later this year. If launched as an application programming interface (API), these models could enable businesses and developers to integrate Microsoft’s AI capabilities into their own applications, offering an alternative to OpenAI’s API services.
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This move could significantly expand Microsoft’s influence in the AI market, allowing it to compete more directly with OpenAI, Google DeepMind, and Meta in the AI infrastructure space.
Microsoft’s AI Future: A New Competitive Landscape?
By developing in-house AI models and testing alternatives to OpenAI’s technology, Microsoft is positioning itself as a stronger, more independent AI leader. This shift suggests that while its partnership with OpenAI remains intact, Microsoft is preparing for a future where it is less reliant on any single AI provider—potentially challenging OpenAI’s dominance in the AI sector.
With AI-powered reasoning models in development and potential API offerings, Microsoft’s evolving AI strategy could reshape the competitive landscape of enterprise AI services in 2025 and beyond.
