Microsoft diversifies AI partnerships amid cracks with OpenAI.
Anthropic’s AI to be integrated into Office 365 apps.
OpenAI remains a partner for frontier models.
As cracks develop in the collaboration between Microsoft and OpenAI collaboration, the tech giant has now started exploring alternatives to reduce its reliance on the ChatGPT maker. The Information has recently reported that Microsoft is now turning to Anthropic, a rival AI start-up, to integrate its technology into Office 365 apps.
The report stated that Anthropic will help Microsoft with new features in Word, Excel, PowerPoint, and Outlook. However, OpenAI will still be there. The move will just end Microsoft’s sole reliance on OpenAI in its productivity suite. “OpenAI will continue to be our partner on frontier models and we remain committed to our long-term partnership,” a Microsoft spokesperson told TechCrunch.
This comes amid the ongoing tension between Microsoft and OpenAI. The AI giant has been pursuing its own infrastructure projects and even exploring a potential competitor to LinkedIn. It prompted Microsoft to explore alternative AI collaborators.
The Information reported that Microsoft executives believe Anthropic’s lates model, Claude Sonnet 4, outperforms OpenAI in specific application, such as generating visually polished PowerPoint presentations.
And to be noted, this isn’t Microsoft’s first step toward diversification. While OpenAI remains its main AI provider, the company already offers other models, including xAI’s Grok and Anthropic’s Claude through GitHub Copilot. On top of that, Microsoft is also launching its own first in-house models, MAI-Voice-1 and MAI-1-preview.
Microsoft-OpenAI Partnership Shows Cracks
This dispute between Microsoft and OpenAI extends beyond financial matters, reflecting a broader struggle for control over AI’s future. If unresolved, it could lead to legal action, regulatory intervention or the potential dissolution of a partnership that began with Microsoft’s $1 billion investment in OpenAI in 2019.
The collaboration experienced significant challenges, including when OpenAI’s CEO Sam Altman was removed from the board and stripped of his role. Although the board reversed its decision within days, reinstating Altman as CEO and reorganising the board, this episode highlighted the underlying strain in their relationship.
There are three major issues that have reportedly strained the relationship between the two tech giants - equity structure, Windsurf deal, and conflict of interest over AI chatbots for businesses.
Firstly, OpenAI and Microsoft are in negotiations over the equity structure of OpenAI’s planned transition to a public‑benefit corporation. Microsoft is reportedly pressing for a larger ownership stake in the reorganised entity than OpenAI is prepared to concede.
The deadline for completing the conversion looms at the end of this year. Failure to finalise the change in legal status by 31 December 2025 could jeopardise as much as $20 billion in pledged funding, industry observers warn.
Secondly, both parties are deadlocked over the terms of OpenAI’s $3 billion deal to buy coding start-up Windsurf. Under their current agreement, Microsoft can access all of OpenAI’s intellectual property (IP).
Microsoft’s own AI coding tool, GitHub Copilot, competes directly with OpenAI’s offerings, and OpenAI is pushing back to keep Windsurf’s IP out of Microsoft’s hands.
Lastly, OpenAI and Microsoft now face a conflict of interest, competing across products from consumer chatbots to AI tools for businesses. Last year, Microsoft CEO Satya Nadella hired a rival of Altman, who initiated a secret effort to develop AI models for Microsoft.
