Microsoft explores startup acquisitions and new AI partners amid OpenAI tensions

Microsoft is exploring AI startup acquisitions and other partnerships as it prepares for a future with less reliance on OpenAI, according to a May 13 Reuters report that cited five people familiar with the matter. The move followed an April 27 rewrite of the companies’ partnership that ended Microsoft’s exclusive right to sell OpenAI models and stopped Microsoft from paying revenue share on OpenAI products it resells on Azure. Reuters said Microsoft’s talks have included Inception, a startup founded in 2024 by a Stanford University team, and that the discussions may not result in a deal. Microsoft has not publicly announced an acquisition plan, and Inception declined to comment, Reuters reported. ### Which report moved this story into public view? Reuters reported on May 13 that Microsoft was shopping for AI startups “for life after OpenAI,” citing five people familiar with the matter. PYMNTS and other outlets then summarized that report on May 14, framing the effort as preparation for a possible future split or looser relationship with OpenAI. (finance.yahoo.com) The Reuters report said Microsoft had previously weighed acquiring code-generation startup Cursor but stepped back because of internal concerns that a deal could face regulatory scrutiny given Microsoft’s ownership of GitHub Copilot. Reuters also said Elon Musk’s SpaceX, which bought xAI in February, had competed for some of the same assets. (finance.yahoo.com) ### Why is Microsoft looking beyond OpenAI now? April 27 is the key date. Microsoft and OpenAI said that day they had amended their agreement to make Microsoft’s license to OpenAI intellectual property non-exclusive and to let OpenAI serve products through any cloud provider, while Microsoft remained OpenAI’s primary cloud partner. Bloomberg reported the same day that the change opened the door for OpenAI to pursue cloud deals with rivals including Amazon. (finance.yahoo.com) February 27 showed the relationship was already under strain. In a joint statement published then, Microsoft and OpenAI said they would continue to work closely across research, engineering and product development, while affirming that Microsoft maintained exclusive access to OpenAI intellectual property at that time. The April 27 amendment replaced that structure with a looser one. (blogs.microsoft.com) ### Why does Inception keep coming up? Inception is one of the few named targets in the reporting. Reuters said Microsoft is in discussions with the startup, which was founded in mid-2024 and focuses on a different method for building large language models. Microsoft’s M12 venture fund invested in Inception’s $50 million seed round in late 2025, Reuters reported. (blogs.microsoft.com) Reuters said Inception’s models use diffusion, a technique more commonly associated with AI image and video generation, to generate and refine multiple tokens at once rather than one token at a time. Reuters cited researchers saying that approach can improve speed. A person familiar with the startup told Reuters that Inception had hired a bank to help negotiate a deal and was seeking a price above $1 billion. (finance.yahoo.com) ### How much has Microsoft already committed to OpenAI? PYMNTS, citing Reuters and a Microsoft securities filing, said Microsoft has provided $11.8 billion of the $13 billion it pledged to OpenAI. The same PYMNTS report said Michael Wetter, Microsoft’s head of corporate development, testified in court that Microsoft has spent more than $100 billion on its OpenAI investment, infrastructure development and hosting costs. (finance.yahoo.com) Bloomberg reported on May 11 that Microsoft had targeted a $92 billion return from its early OpenAI investments, citing planning documents disclosed in court. Satya Nadella testified that the investments “worked out well because we took the risk,” Bloomberg reported from the federal trial in Oakland, California. (pymnts.com) ### Is this a break with OpenAI or a hedge? Microsoft and OpenAI both said on April 27 that the amended agreement was meant to provide “flexibility” and “long-term clarity,” and both companies said they would continue building and operating AI platforms at scale together. That leaves room for Microsoft to keep selling OpenAI services while also pursuing its own model ambitions and outside deals. (bloomberg.com) Reuters reported that one purpose of potential acquisitions would be to help Microsoft add AI talent and meet its stated goal of building a cutting-edge AI model by next year. That is the clearest reported near-term milestone in the story. Any acquisition, including discussions with Inception, remains subject to negotiation and may not happen. (finance.yahoo.com) (blogs.microsoft.com)