Look, the OpenAI deal was smart at first. Microsoft threw billions at OpenAI and got GPT-4 before everyone else. Copilot became a thing. Stock price went up. Everyone wins, right?
But here's the problem: you're still just a customer. When OpenAI changes API pricing or delays releases, Microsoft has to deal with it. When Sam Altman gets fired and un-fired, Microsoft executives probably shit themselves wondering if their entire AI strategy just got torpedoed.
The Dependency Problem
Microsoft's been building Copilot on top of OpenAI's models, which is fine until it's not. Every time OpenAI tweaks something, Microsoft's engineering teams have to scramble. Every pricing change hits Microsoft's margins. Every OpenAI drama becomes Microsoft's problem.
So Microsoft's been hiring AI researchers like crazy and building their own infrastructure. Makes sense - if you're going to bet your company on AI, you probably shouldn't depend on someone else's models forever.
The smart play is building models for specific tasks where they can match or beat OpenAI's stuff at lower cost. Voice generation, code completion, basic text tasks. Leave the cutting-edge reasoning to GPT-4 while handling the commodity AI workloads in-house.
What This Means Long-Term
The partnership isn't dead, but Microsoft's building leverage. When their deal with OpenAI comes up for renewal, Microsoft won't be negotiating from a position of complete dependence.
Google's got their own models. Anthropic's got Claude. Even Meta has LLaMA (though nobody uses it). Microsoft was the only big tech company that didn't own their AI stack. That was always going to be unsustainable.
The bigger picture is that Microsoft finally learned the lesson every other big tech company already knew: if AI is your future, you need to own your models. You can't build a trillion-dollar business on someone else's API.
OpenAI's still going to make bank from Microsoft. But they're no longer holding all the cards. When two companies each have billions riding on a partnership, things get complicated fast.
Reality Check
Building competitive AI models is hard as fuck. Google's been at this for decades and their stuff still feels behind ChatGPT in some ways. Microsoft's going to need years to build models that truly compete with the best of OpenAI.
But they've got the resources, the infrastructure, and finally the motivation. The Azure data centers are already there. The H100 clusters are spinning. They're hiring researchers like crazy.
The smart money says this is just the beginning. Microsoft's not trying to replace GPT-4 tomorrow. They're building the foundation to not need OpenAI five years from now.