What is Microsoft’s AI Future Without OpenAI?

If headlines are to be believed, human-AI romantic relationships are on the rise. Microsoft, on the other hand, is in the midst of a conscious uncoupling with its longtime AI partner-slash-pseudosubsidiary.

As its relationship with OpenAI evolves and dissolves, Microsoft offered some clues Monday at its Build developer conference in Seattle about its now somewhat murky future in the AI space. The main message? The tech giant is single and ready to mingle.

I Azure You, We’re Open

For a while, OpenAI seemingly was Microsoft’s AI play. Now? Not so much. With $13 billion invested to date, the world’s most valuable company remains the biggest backer of the world’s most famous AI startup. But last year, tensions between the two came to a head as Microsoft shut off the money hose amid concerns over financial stability, according to sources who spoke to The New York Times. Those tensions only became further inflamed this year as OpenAI leaders began to yearn for an IPO and more freedom from the shackles of its nonprofit control structure, according to a Financial Times investigation published last week.

Still, Microsoft hasn’t developed its own large-language model. But what it lacks in consumer-facing AI products, the company seems to think it more than makes up for in back-end AI platforms. Translation: At the center of Microsoft’s AI play is its ability to power AI products of the non-ChatGPT variety:

• On Monday, Microsoft announced that it is expanding Azure’s AI foundry model to include support for Grok 3 and Grok 3 mini, the AI models created by Elon Musk’s xAI. This adds Grok to a list of 1,900 AI models that can be hosted by Azure. Last week, Microsoft CEO Satya Nadella told Bloomberg that the Azure team worked overtime to add support for DeepSeek’s R1 model after its splashy debut earlier this year.
• Microsoft also announced Monday that Windows will soon add support for Anthropic’s open-source “Model Context Protocol” system, which powers so-called “AI Agents” across various apps and services. Microsoft also announced more tools for using AI models directly on its computers rather than through Azure.

Shifting Terms: In an interview with The Verge published Monday, CTO Kevin Scott pushed back on recent Reuters reports that Microsoft is scaling back its $60 billion data center expansion plans, though he didn’t entirely dismiss a question about whether OpenAI has changed from an interdependent AI partner to merely a major Azure customer. As couples therapists often say, sometimes it’s good to define the terms of a relationship.