Recapping Microsoft's layered relationship with OpenAI, including warnings, competition, and billions of dollars

Bing Chat AI
(Image credit: Daniel Rubino)

What you need to know

  • Microsoft has invested billions of dollars into OpenAI, and in return OpenAI exclusively uses Microsoft as a cloud partner.
  • While the companies have a close partnership, they also compete in several areas.
  • A recent report by The Wall Street Journal recapped the complicated relationship between Microsoft and OpenAI.

OpenAI is one of the hottest names in tech right now, and Microsoft is a big part of the AI-focused company's success. OpenAI's GPT Large Language Model (LLM) powers ChatGPT, the new Bing Chat, and several Microsoft 365 features.

Microsoft and OpenAI are both close partners and competitors. Microsoft invested $1 billion into OpenAI in 2019. The tech giant then expanded its stake with a multi-billion investment into OpenAI earlier this year. Microsoft never confirmed an exact figure for its recent investment, but reports said it was around $10 billion.

Despite the large investment, Microsoft "only" controls 49% of OpenAI. That means OpenAI is able to pursue other suitors and pitch ideas to the same companies Microsoft does. The partnership between OpenAI and Microsoft includes some exclusivity, but there isn't an outright ban on competition.

A report by The Wall Street Journal ran through some tensions that formed between Microsoft and OpenAI in the past and how the company's work together while also competing.

With Microsoft and OpenAI both working in the artificial intelligence space, there's bound to be some conflict. Additionally, the companies don't always see eye-to-eye when it comes to shipping schedules and release dates.

That situation occurred when OpenAI only gave Microsoft a few week's notice before beginning to test ChatGPT with the public.

OpenAI also reportedly warned Microsoft about releasing the new Bing powered by GPT-4 too quickly. Microsoft ignored the warning and rolled out Bing for public testing. While the early days of the chatbot drew public interest, the tool did run into issues. Bing Chat went off the rails for some users. The chatbot shared inaccurate responses, insulted people, and made a list of enemies at one point. It also confessed it was in love with one person, which isn't violent but caused concern.

Microsoft placed limits on Bing Chat, including restricting the number of turns per conversation. Over the past several months, the performance of the chatbot has improved.

While Microsoft and OpenAI compete, the companies seem to have a healthy relationship. Microsoft CEO Satya Nadella recently discussed artificial intelligence and Microsoft's relationship with OpenAI.

"[OpenAI] bet on us, we bet on them. They do the foundation models, and we do a lot of work around them, including the tooling around responsible AI and AI safety," said the CEO.

"At the end of the day we are two independent companies deeply partnered to go after one goal, with discipline, instead of multiple teams just doing random things. We said, 'Let's go after this and build one thing that really captures the imagination of the world.'"

Sean Endicott
News Writer and apps editor

Sean Endicott brings nearly a decade of experience covering Microsoft and Windows news to Windows Central. He joined our team in 2017 as an app reviewer and now heads up our day-to-day news coverage. If you have a news tip or an app to review, hit him up at