Microsoft Plans to Integrate Third-Party AI Models into Copilot 365 Independently of OpenAI

Microsoft has been a big player in the tech world, investing a whopping $13 billion in OpenAI, the creators of ChatGPT. Their partnership seemed like a match made in tech heaven. Yet, recent developments suggest things might not be as rosy as they appear. Earlier this year, Microsoft briefly surpassed tech giants like Apple and NVIDIA in value, largely due to its AI initiatives, including substantial investments in OpenAI. This arrangement gave Microsoft first dibs on new AI models, allowing them to integrate cutting-edge technology into their offerings. However, reports are surfacing that suggest Microsoft may be preparing to introduce new AI models into its Microsoft 365 Copilot service that are not supported by OpenAI.

The details from a Reuters report hint at a shift in strategy, citing costs and performance as primary motivators. It seems that Microsoft’s current AI models, like the GPT-4 from OpenAI, aren’t as cost-effective or responsive as needed for their enterprise customers. Microsoft is now considering cheaper solutions for enterprise features, aiming to pass savings onto their customers. This news follows previous reports of tension between Microsoft and OpenAI, highlighting not only disagreements over their exclusive deal but also the vast amounts of money spent on computing power that barely meets OpenAI’s advanced AI needs.

Adding another layer of complexity, OpenAI employees have noted that Microsoft’s struggle to satisfy their computing demands might hinder their progress toward achieving AGI, as other AI labs surge ahead.

Meanwhile, Microsoft 365 Copilot, a tool integrated into essential Microsoft applications like Word and PowerPoint, is designed to streamline productivity by quickly sifting through data, summarizing meetings, and managing email. A recent analysis pointed out Microsoft’s challenges with Copilot, despite having early access to OpenAI’s innovations. A Microsoft executive candidly described many Copilot AI tools as “gimmicky,” and revealed the company’s dependence on third-party vendors to operationalize Copilot across its tech offerings. Reports of Copilot underperforming—working effectively only about 25% of the time—have raised concerns among users about its $30 per user monthly cost.

In parallel, OpenAI is maneuvering to remove a clause that would end its partnership with Microsoft upon reaching the AGI benchmark. Sam Altman, OpenAI’s CEO, hinted that AGI might arrive sooner than expected, albeit with minimal societal upheaval. A technical insider from OpenAI even suggested that AGI might have been realized following their recent release of OpenAI o1.

In reaction, Microsoft may be reassessing its AI strategies. Diversifying risks seems prudent, especially amid rumors of OpenAI facing potential losses up to $5 billion within the next year. Microsoft CEO Satya Nadella has suggested that distancing from OpenAI might be the logical step once AGI is officially achieved.