Microsoft has a long and complicated relationship with OpenAI, having reportedly invested $13 billion in the ChatGPT maker as part of a long-term partnership. As part of the deal, Microsoft runs OpenAI's models across its enterprise and consumer products and is OpenAI's exclusive cloud provider.
But the tech giant called the startup a “competitor” for the first time in an SEC filing on Tuesday.
In Microsoft's annual 10K, OpenAI joined a long list of competitors in the AI space alongside Anthropic, Amazon, and Meta. And thanks to OpenAI's new SearchGPT feature announced last week, OpenAI is now listed as a Microsoft competitor in search alongside Google.
Microsoft may be changing its stance on its relationship with OpenAI in light of antitrust concerns. The FTC is currently investigating that relationship and other investments by similar cloud providers in the AI startup. Microsoft recently agreed to give up its board observer status at the startup, a position it acquired after a tumultuous time last fall when OpenAI's board temporarily fired CEO Sam Altman and Microsoft CEO Satya Nadella offered Altman and other top executives jobs at Microsoft.
But such SEC filings are often a forum for companies to issue highly cautious warnings to investors.
In Silicon Valley, partners and competitors aren't necessarily mutually exclusive. In 2000, Yahoo, the dominant search engine at the time, announced an agreement to display Google search results on its web pages. The two companies partnered for several years, but Google dominated Yahoo in search and became the main, if unofficial, gateway to the Internet. Although the two companies were partners, they were still a threat to each other (Yahoo owns TechCrunch).
Such power shifts have happened many times in the tech world, and it's at least conceivable that the relationship between Microsoft and OpenAI could follow a similar path.
Either way, Microsoft isn't putting all its eggs in one basket.
In March, Microsoft hired Mustafa Suleiman and Karen Simonyan, co-founders of billion-dollar AI startup Inflection AI, to head the company's new Microsoft AI division. The cloud provider is investing heavily in Microsoft Copilot and is building an entirely separate AI future from OpenAI.