Microsoft confirms plan to ditch OpenAI — as the ChatGPT firm continues to beg Big Tech for cash

In a move that is perhaps less surprising than you might think, Microsoft seems to be readying up to dump OpenAI.

Right now, Microsoft's entire AI operation is powered by ChatGPT and other OpenAI models, including DALLE 3. Microsoft has shown impressive growth and demand for its enterprise-grade AI tools, including things like Microsoft 365 Copilot and Github Copilot, even if its consumer-level efforts have largely fallen flat.

Microsoft and OpenAI are long-rumored to have endured something of a tumultuous relationship. Microsoft was a very early investor in OpenAI, and won itself some incredibly lucrative contracts as a result, including some forms of exclusivity over OpenAI's models. Indeed, Microsoft still holds 27% of the new "for profit" arm of OpenAI, and maintains IP rights for OpenAI's models until 2032.

However, Microsoft and OpenAI re-worked aspects of the deal last October, freeing up OpenAI to seek compute from competing cloud firms, and allowing Microsoft to divest itself of some of the endlessly spiralling risk.

OpenAI is notoriously on the hook for over a trillion dollars in future compute spend contracts, with big tech companies like Microsoft, Amazon, Softbank, and others artificially propping up the company. Run by Sam Altman, OpenAI has been mired in almost constant controversies, its balance sheet notwithstanding. The firm has so far made zero dollars, and requires near-constant cash injections to stay afloat.

Things may be about to get even rockier for OpenAI, as Microsoft AI chief Mustafa Suleyman just confirmed to FT (paywalled) that the firm is gearing up to ditch OpenAI's models.

“We have to develop our own foundation models, which are at the absolute frontier, with gigawatt-scale compute and some of the very best AI training teams in the world," Suleyman said of the move, which potentially casts another shadow over OpenAI's future.

Microsoft has already been investing in some of OpenAI's competitors, including Anthropic, but now plans to launch its own frontier-grade models "some time" in 2026. The move essentially makes Microsoft a direct competitor to OpenAI and other similar firms, as all of big tech tries to wrap its collective head around what this post-AI future might look like. It's potentially another blow for Sam Altman's outfit, after NVIDIA snubbed suggestions it would be investing $100 billion in the firm, despite earlier rumors.

In the full FT piece, the Google Deepmind co-founder Suleyman struck an optimistic tone about how AI could "benefit humanity," while in the same breath, suggesting that all white collar work will be automated within two years. I'm sure if you're a white collar worker, you'll be thrilled to hear that. Microsoft says it aims to use AI to improve and optimize healthcare, putting a focus on building "medical super-intelligence," and stating that soon, AI tools will be self-improving and near fully autonomous in their behavior. Microsoft has put a big emphasis on AI agents in its Azure tools, which allow users to automate prompts and workflows while adopting corporate and legal compliance.

The public maintains a generally negative sentiment about AI, despite the skyrocketing amount of people actively using the tech. Although, few actually pay for it. Microsoft itself has been the target of the "Microslop" meme, where users mock the firm's haphazard implementation of AI features into Windows 11. Investors also handed Microsoft a multi-biillion dollar rout over the last few weeks, nervous that the capital expenditure on AI infrastructure isn't justified in reality.

Irritations aside, there are real concerns about AI blowing up society. Despite these fears of economic upheaval and mass job losses, none of the big AI companies are slowing down. If anything, they're speeding up. The ethical concerns are seeing OpenAI, Anthropic, and other AI companies are shedding researchers and staffers at a persistent cadence — many of whom leave dire warnings in their wake. Just yesterday, I wrote about an OpenAI quitter who penned a familiar op-ed, full of dark portents about AI tech damaging, or even destroying society.

On such fears, Suleyman remained upbeat.

"We have to reset that and make the assumption that we should only bring a system like that into the world, that we are sure we can control and operates in a subordinate way to us. These tools, like any other past technology, are designed to enhance human wellbeing and serve humanity, not exceed humanity."

I'm not sure I believe you, Mr. Suleyman.

Will we see Microsoft's AI models eventually compete with Gemini and ChatGPT? Or will Microsoft keep the benchmarks private like it does with its current experimental MAI models? Let us know your thoughts.

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