Microsoft eyes AI startup buys

Microsoft is shopping for artificial-intelligence startups as it prepares for a future less dependent on OpenAI, according to a May 13 Reuters report that cited five people familiar with the matter. The search comes weeks after Microsoft and OpenAI rewrote core terms of their partnership on April 27, allowing OpenAI to serve customers across cloud providers and capping OpenAI’s revenue-share payments to Microsoft. The revised agreement kept Microsoft as OpenAI’s primary cloud provider and preserved Microsoft’s license to OpenAI model intellectual property through 2032, but that license is no longer exclusive. Microsoft has invested more than $13 billion in OpenAI since 2019, CNBC reported on April 27. ### Which part of the OpenAI deal changed most recently? OpenAI and Microsoft said on April 27 that OpenAI can now serve “all of its products” across any cloud provider, including Amazon and Google, while Microsoft remains the primary cloud provider and gets first access for OpenAI products on Azure unless Microsoft decides otherwise. CNBC reported that OpenAI’s payments to Microsoft continue through 2030 and are now “subject to a total cap,” while Microsoft no longer pays OpenAI a revenue share on products it resells through Azure. The Information reported, and Reuters relayed on May 11, that the cap on OpenAI’s total revenue-sharing payments to Microsoft is $38 billion. Reuters’ May 11 item did not add further contract terms beyond attributing the figure to The Information. ### What is Microsoft looking to buy? (cnbc.com) Reuters reported on May 13 that Microsoft is evaluating startup acquisitions that could add AI talent and help the company build a cutting-edge AI model by next year. The report said Microsoft held talks this spring about buying code-generation startup Cursor but backed away because of internal concerns that a deal might face regulatory scrutiny given Microsoft’s ownership of GitHub Copilot. (money.usnews.com) Reuters also said Microsoft remains in talks with Inception, a startup working on large language model technology. Inception and Cursor were identified in the Reuters report as examples of the kinds of assets Microsoft has considered as it broadens its AI options. Reuters said three of the people familiar with the matter tied the acquisition search directly to Microsoft’s stated goal of building a frontier model on its own timetable. (money.usnews.com) ### What has Microsoft already built without OpenAI? Microsoft on April 2 announced three in-house MAI models — MAI-Transcribe-1, MAI-Voice-1 and MAI-Image-2 — and made them available in Foundry, the company’s developer platform. Mustafa Suleyman, chief executive of Microsoft AI, said in an interview reported by Bloomberg that Microsoft aims to develop large, cutting-edge AI models by next year and to reach state-of-the-art performance across text, image and audio models by 2027. (money.usnews.com) The April 2 launch showed Microsoft already has commercial model offerings that do not carry OpenAI’s branding. Microsoft’s own announcement described the three MAI systems as available in Foundry, giving enterprise customers another set of in-house tools alongside models from partners and open-source providers. (microsoft.ai) ### Why is Microsoft looking beyond one supplier? Satya Nadella told Bloomberg Businessweek in a May 15, 2025 interview that DeepSeek’s R1 was the first post-OpenAI model he had seen “post some points.” In that interview, Bloomberg reported that Microsoft assessed the competitive threat after DeepSeek released a model that appeared to deliver results roughly on par with OpenAI at much lower cost. (microsoft.ai) OpenAI’s own executives have also described limits in the old arrangement. Denise Dresser, OpenAI’s revenue chief, said in an internal memo cited by CNBC on April 27 that the partnership had “limited our ability to meet enterprises where they are.” That statement came with the April 27 contract rewrite that ended Microsoft’s exclusive right to sell OpenAI models. (bloomberg.com) ### What should readers watch next? Reuters said on May 13 that Microsoft is still in discussions with Inception and is pursuing startup deals that could support a new frontier model by next year. Microsoft has not announced an acquisition, and the company’s next concrete milestones are likely to be any disclosed startup transaction or further MAI model releases through Foundry. (money.usnews.com) (cnbc.com)