Microsoft eyes startups after OpenAI deal

Microsoft is looking beyond OpenAI at the same time its commercial ties with the startup are being rewritten. Reuters reported on May 13 that Microsoft has been shopping for artificial-intelligence startups and has held talks with Inception, a company working on large language models, as it prepares for a future less tied to OpenAI. The report said Microsoft had also explored buying coding startup Cursor earlier this spring but backed away. Two days earlier, Reuters separately reported that OpenAI had agreed to cap the total revenue it shares with Microsoft at $38 billion through 2030 under revised terms first reported by The Information. ### Why is Microsoft looking at startups now? Reuters said five people familiar with the matter described Microsoft as shopping for AI startups as it seeks more independence from OpenAI. Three of those people told Reuters the deals could help Microsoft add research talent and support its goal of building a cutting-edge AI model by next year. (money.usnews.com) Microsoft’s search comes after years of deep financial and infrastructure ties with OpenAI. Reuters reported that Microsoft had already provided $11.8 billion of its promised $13 billion to OpenAI, citing an April 29 securities filing, and that the company has spent more than $100 billion on its OpenAI investments and related hosting and infrastructure costs, according to testimony from corporate development executive Michael Wetter. (money.usnews.com) ### What happened with Inception and Cursor? Inception is one of the companies Microsoft has discussed acquiring, Reuters reported, citing people familiar with the talks. The discussions are ongoing and may not lead to a transaction, the report said, and Inception declined to comment. (goldsea.com) Cursor was another target Microsoft examined this spring, according to Reuters. The company stepped back from that potential acquisition because of internal concerns that buying Cursor might not survive regulatory scrutiny given Microsoft’s ownership of GitHub Copilot, three people told Reuters. (money.usnews.com) ### What changed in the OpenAI-Microsoft deal? May 11 brought a separate sign that the relationship is being recalibrated. Reuters reported that OpenAI agreed to cap the total revenue it shares with Microsoft at $38 billion, citing The Information and a person with knowledge of the arrangement. (money.usnews.com) A later Reuters account said the companies renegotiated their agreement in April, ending OpenAI’s exclusivity with Microsoft and setting the $38 billion cap through 2030. That report said the new structure also moved more cash to Microsoft in the near term, a change intended to make OpenAI more attractive to investors by limiting the long-run payout burden. (msn.com) ### What does this mean for companies building on these models? Enterprise customers that built heavily around a single model provider now face a market where supplier relationships are less fixed than they once looked. Reuters did not frame that as a strategy prescription, but the reported changes point to a setup in which buyers may want systems that can switch among providers if pricing, access or performance changes. (msn.com) Named software vendors and cloud customers have increasingly discussed model routing, portability and multi-provider deployment as ways to avoid dependence on one supplier. In this case, the reported facts are narrower: Microsoft is examining startup acquisitions, OpenAI has loosened exclusivity, and talks with Inception remain unresolved. (money.usnews.com) ### What should readers watch next? The next concrete step is whether Microsoft turns its talks with Inception into a signed deal. Reuters said those discussions were active as of May 13 and could still fall apart. 2030 is the outside date attached to the reported $38 billion revenue-sharing cap, while Microsoft’s own target for a cutting-edge internal model is next year, according to people cited by Reuters. (money.usnews.com) Those two timelines — one contractual, one product-related — are the clearest markers in what happens next. (msn.com)