Microsoft's Annual Report Reveals A New Rivalry: OpenAI

On Tuesday, Microsoft's latest annual report showed that the tech giant included the artificial intelligence startup OpenAI, alongside companies with huge market value such as Amazon, Apple, Google, and Meta.

Microsoft has a long-term partnership with OpenAI and, according to reports, is OpenAI's largest investor, having invested $13 billion in the company. Microsoft serves as OpenAI's exclusive cloud provider and utilizes the latter's AI models in its products for business customers and consumers.

However, the new product lineups that the two companies have been rolling out are pointing to one thing: they are invading each other's territories.

In the FORM 10-K document that Microsoft submitted to the U.S. Securities and Exchange Commission (SEC), Microsoft listed OpenAI as a competitor in AI products, search engines, and news advertising.

Currently, some companies pay OpenAI for access to its models, while others obtain them through Microsoft's Azure OpenAI service. Microsoft's own Copilot chatbot, an alternative to ChatGPT, is available to users through the Bing search engine and the Windows operating system.

Just last week, OpenAI released a search engine prototype called SearchGPT, which has made Microsoft a bit uneasy. The model is currently being tested with a small group of users and publishers, with the ultimate plan to integrate this tool into the chatbot ChatGPT.

OpenAI pointed out that with this new product, users have the opportunity to search more naturally and intuitively, and in addition to seeing the answers to queries, the creators and news publishers will be credited.

By offering consumers a new way to search for online information, OpenAI is capturing market share in the search engine market, which has made the existing giants in this market feel threatened.

Regarding the increasingly apparent competitive relationship between Microsoft and OpenAI, a spokesperson for OpenAI clarified that there has been no change in the relationship between the two companies, and their partnership is built on the basis of mutual competition. He added that Microsoft remains a good partner of OpenAI.

Nevertheless, this year has been a dramatic one. This year, after OpenAI CEO Sam Altman returned to the company and restructured the board, OpenAI gave Microsoft a non-voting board seat, and Microsoft announced earlier this month that it had given up this position.

In March of this year, Microsoft CEO Satya Nadella brought in Mustafa Suleyman, the co-founder of DeepMind, indicating that Microsoft is broadening its path in artificial intelligence. DeepMind is an artificial intelligence research company that was established before OpenAI and was acquired by Google in 2014.

Suleyman later founded Inflection AI, and previously Inflection AI reached a cooperation with Microsoft. As part of the cooperation, Suleyman was appointed as the head of Microsoft's new AI department, and several employees of Inflection AI also joined the department.

On the surface, Nadella still has a close relationship with Altman, and Nadella has expressed his appreciation for Altman on multiple occasions in interviews.