Microsoft Said to Be Developing AI Reasoning Models to Compete With OpenAI

Microsoft is developing in-house artificial intelligence reasoning models to compete with OpenAI and may sell them to developers, The Information reported on Friday, citing a person involved in this initiative.

The Redmond, Washington-based company, a major backer of OpenAI, has begun testing out models from xAI, Meta and DeepSeek as potential OpenAI replacements in Copilot, according to the report.

Microsoft has been looking to reduce its dependence on the ChatGPT 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 OpenAI and reduce costs.

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

According to The Information report, Microsoft’s AI division, led by Mustafa Suleyman, has completed the training of a family of models, internally referred to as MAI, which perform nearly as well as the leading models from OpenAI and Anthropic on commonly accepted benchmarks.

The team is also training reasoning models, which use chain-of-thought techniques — a reasoning process that generates answers with intermediate reasoning abilities when solving complex problems — that could compete directly with OpenAI’s, the report said.

Suleyman’s team is already experimenting with swapping out the MAI models, far larger than an earlier family of Microsoft models called Phi, for OpenAI’s models in Copilot, the report said.

The company is considering releasing the MAI models later this year as an application programming interface, which will allow outside developers to weave these models into their own apps, the report said.

Microsoft and OpenAI did not immediately respond to Reuters’ requests for comment.

© Thomson Reuters 2025