The report characterized the move as preparation by the tech giant for a future separate from OpenAI.
Microsoft had considered acquiring code-generation startup Cursor but rejected the idea due to in-house concerns that Microsoft’s ownership of GitHub Copilot would not sit well with regulators, the report said.
Microsoft is in talks with AI startup Inception, according to the report. The company’s M12 venture fund took part in a $50 million seed funding round for Inception late last year. Deals such as this would allow Microsoft to better compete with the likes of OpenAI.
The two companies have been partners since Microsoft invested $1 billion in a then-unknown AI startup. Since then, Microsoft has given $11.8 billion of the $13 billion it pledged to OpenAI, the report said, citing a securities filing from Microsoft.
Microsoft has spent more than $100 billion on its OpenAI investments and its costs of developing infrastructure and hosting, Michael Wetter, who heads the company’s corporate development, testified in court on Wednesday, per the report.
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The companies’ relationship has shifted and, at times, been contentious over the years. OpenAI found that its needs were greater than what Microsoft could supply, the report said. Microsoft was also contractually blocked from building a foundation model that could compete with OpenAI’s offerings.
An amended deal late last year permitted Microsoft to develop artificial general intelligence, a theoretical version of AI that can perform tasks at or above the levels a human, according to the report.
In late April, OpenAI and Microsoft agreed to a deal that allows OpenAI to build some products with Microsoft’s competitors like Amazon. Microsoft will remain a major shareholder in OpenAI but will stop paying a revenue share to the startup.
After Microsoft’s latest earnings report in April, PYMNTS wrote the company’s performance “must be viewed in the context of a competitive AI landscape.”
While its rivals are spending heavily on infrastructure and models, few of them can compete with Microsoft’s combination of scale, enterprise relationships and integrated suite of products.
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