Microsoft developing AI reasoning models to compete with Open AI

Microsoft is working on its own AI reasoning models, which could lessen its dependence on Open AI. According to a report by The Information on Friday, citing an individual involved in the project, the company aims to develop these models to compete with Open AI and may offer them to developers for purchase.

The Redmond, Washington-based tech giant, a key supporter of Open AI, has started evaluating models from xAI, Meta, and Deep Seek as possible alternatives to Open AI for use in Copilot, the report states.

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Expanding AI Reasoning Capabilities Beyond Open AI

Microsoft has been looking to reduce its dependence on the Chat GPT maker, even as its early partnership with the startup put it in a leadership position among Big Tech peers in the lucrative AI race. Reuters reported exclusively in December that the company has been working on adding internal and third-party AI models to power its flagship AI product Microsoft 365 Copilot to diversify from the current underlying technology from Open AI and reduce costs.

When Microsoft announced 365 Copilot in 2023, a major selling point was that it used Open AI’s GPT-4 model.

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According to The Information report, Microsoft’s AI division, led by Mustafa Suleyman, has completed training a series of models known internally as MAI. These models perform nearly on par with top models from Open AI and Anthropic based on widely recognized benchmarks.

The team is also working on reasoning models that leverage chain-of-thought techniques—a method that enables intermediate reasoning steps to solve complex problems—positioning them as direct competitors to Open AI’s models. Suleyman’s team has already begun testing the MAI models, which are significantly larger than Microsoft’s earlier Phi models, as potential replacements for Open AI’s models in Copilot.

Additionally, Microsoft is considering launching the MAI models later this year as an API, allowing external developers to integrate them into their own applications, the report noted.