Microsoft eyes AI startup deals

Microsoft is looking at artificial-intelligence startup deals as it plans for a future less reliant on OpenAI, according to a Reuters report published on May 13. Five people familiar with the matter told Reuters the company is shopping for acquisitions that could bring in talent and technology as it pursues its own advanced model work. (money.usnews.com) The report comes less than three weeks after Microsoft and OpenAI rewrote key terms of their alliance. The companies said on April 27 that Microsoft would remain OpenAI’s primary cloud partner, but OpenAI could sell products across any cloud provider and Microsoft’s license to OpenAI intellectual property would become non-exclusive. (blogs.microsoft.com) ### Why is this coming up now, if Microsoft and OpenAI are still partners? April 27 is the key date. Microsoft said that day the amended agreement gives both companies “flexibility” while keeping Microsoft as OpenAI’s primary cloud partner and preserving Microsoft’s license to OpenAI models and products through 2032. OpenAI said the same day that Microsoft would no longer have an exclusive license and that OpenAI could serve customers on other clouds. May 13 is the second date that matters. Reuters reported that Microsoft is already scouting startup targets as it prepares for what the news agency described as a future independent of its “once-vital partner.” Reuters said the possible deals could help Microsoft build up internal model capabilities by next year. (money.usnews.com) ### What exactly is Microsoft said to be looking for? Reuters said the company is considering startup acquisitions that would help it stock up on AI researchers, engineers and model-building capacity. Three of the people cited by Reuters said the effort is tied to Microsoft’s stated goal of producing a cutting-edge AI model by next year. (blogs.microsoft.com) Microsoft has already built internal model lines. Microsoft’s Phi family is marketed by Azure as a set of small language models, and the company has continued to expand that lineup, including multimodal versions. ### Has Microsoft done a deal like this before? (money.usnews.com) March 19, 2024, offers the clearest precedent. Microsoft said then that Mustafa Suleyman, the DeepMind and Inflection co-founder, would join to run the new Microsoft AI unit, alongside Karén Simonyan as chief scientist. Microsoft also said several members of the Inflection team would move with them. March 21, 2024, added the financial detail. (money.usnews.com) Reuters reported that Microsoft agreed to pay Inflection about $650 million in cash in a licensing arrangement that also let Microsoft hire most of the startup’s staff, including its co-founders. (azure.microsoft.com) ### Who inside Microsoft is driving the in-house AI push? Mustafa Suleyman now leads Microsoft AI. Satya Nadella said in Microsoft’s March 2024 announcement that Suleyman would serve as executive vice president and chief executive of Microsoft AI, overseeing Copilot and related consumer AI work. Microsoft has also been framing AI as a core growth engine in investor materials. (blogs.microsoft.com) In its January 28, 2026 earnings release, Nadella said Microsoft had already built an AI business larger than some of its established franchises, while the company reported Microsoft Cloud revenue of $51.5 billion for the quarter ended Dec. 31, 2025. (finance.yahoo.com) ### What changes in the Microsoft-OpenAI deal matter most here? The non-exclusive license is the headline change. Microsoft said on April 27 that it will keep access to OpenAI intellectual property through 2032, but on non-exclusive terms, and that OpenAI can now sell products through any cloud provider. Microsoft also said it will no longer pay a revenue share to OpenAI, while revenue-share payments from OpenAI to Microsoft continue through 2030 subject to a cap. (blogs.microsoft.com) Those terms mean the partnership remains intact, but less binding than before. That is an inference from the companies’ own description of the amended agreement, which explicitly adds flexibility for both sides while preserving Microsoft’s role as primary cloud partner. (microsoft.com) ### What should readers watch next? 2027 is the near-term marker in the Reuters report. Three people familiar with the matter told Reuters Microsoft wants to have a cutting-edge AI model by next year, making startup hiring or acquisition activity the clearest next sign of how fast that plan is moving. (blogs.microsoft.com) 2030 and 2032 are the longer dated milestones. Under the amended agreement, OpenAI-to-Microsoft revenue sharing continues through 2030, and Microsoft’s license to OpenAI models and products runs through 2032, according to Microsoft and OpenAI. (money.usnews.com) (blogs.microsoft.com)