Microsoft shops startups for AI optionality

Microsoft is canvassing artificial-intelligence startups as it prepares for a future less reliant on OpenAI, according to a Reuters report published on May 13. The outreach comes as court testimony in Elon Musk’s case against OpenAI put new numbers on the scale of Microsoft’s commitment to the partnership. Microsoft has already delivered $11.8 billion of its promised $13 billion to OpenAI, the company said in an April 29 securities filing. (cnbc.com) Michael Wetter, the executive who runs Microsoft’s corporate development group, testified this week that Microsoft will have spent more than $100 billion on OpenAI by June 2026, including investment commitments, infrastructure and hosting costs. (money.usnews.com) ### Which startups has Microsoft looked at? This spring, Microsoft weighed acquiring code-generation startup Cursor, according to Reuters. The company later backed away because of internal concerns that a deal might not clear regulatory review, given Microsoft’s ownership of GitHub Copilot, Reuters reported, citing people familiar with the matter. Inception, a startup founded in mid-2024 by a Stanford University team, is also in discussions with Microsoft, Reuters reported. M12, Microsoft’s venture fund, invested in Inception’s $50 million seed round in late 2025, and the startup recently hired a bank to help negotiate a potential transaction at a price above $1 billion, according to Reuters. (msn.com) ### Why is Microsoft looking beyond OpenAI now? Reuters reported that the possible acquisitions could help Microsoft add AI talent and move faster on its stated goal of building a cutting-edge model by next year. The same report said the company is preparing for a future independent of a partner that had once been central to its AI strategy. (money.usnews.com) Court testimony this week added context to that shift. CNBC reported that internal evidence in Musk v. Altman showed Microsoft executives had worried for years about becoming too dependent on OpenAI and about the startup gaining leverage over the software company. (money.usnews.com) ### What changed in the Microsoft-OpenAI deal? OpenAI and Microsoft renegotiated parts of their commercial arrangement in April, and Reuters reported on May 11 that OpenAI agreed to cap total revenue-sharing payments to Microsoft at $38 billion. Microsoft said in April that the payments would continue through 2030 at the same percentage as before, but subject to an overall cap. (msn.com) Reuters also reported that the revised terms ended exclusivity, allowing OpenAI to work with other cloud providers while Azure remains the primary launch partner for OpenAI workloads. That change gives OpenAI more room to diversify its infrastructure relationships and sets clearer financial limits on what Microsoft can collect under the agreement. (cnbc.com) ### How large is Microsoft’s exposure to OpenAI? By June 2026, Microsoft will have spent more than $100 billion on OpenAI, Wetter testified in court, according to CNBC. That figure includes direct investment commitments as well as the cost of building infrastructure and hosting OpenAI models. (money.usnews.com) Since 2019, Microsoft has committed roughly $13 billion in direct investment to OpenAI, and Reuters reported that $11.8 billion of that amount had been delivered as of the April 29 filing. The larger spending total shows how much of the partnership now sits in data centers, compute and model-serving costs rather than equity alone. (msn.com) ### What happens next? Reuters reported that Microsoft’s talks with Inception are ongoing and may not result in a deal. Inception declined to comment, and Microsoft did not publicly announce any acquisition on May 13. (cnbc.com) Through 2030, the revised OpenAI agreement will govern revenue-sharing payments under the new $38 billion cap, while Microsoft continues pursuing its goal of releasing a cutting-edge AI model by next year, according to Reuters. Any startup deal would unfold alongside that timetable and under the same antitrust scrutiny that Reuters said helped sink the company’s Cursor deliberations this spring. (economictimes.indiatimes.com) (money.usnews.com 1) (money.usnews.com 2)