Microsoft Develops AI Reasoning Models to Compete with OpenAI

Microsoft is advancing its artificial intelligence (AI) strategy by developing its own AI reasoning models to compete with OpenAI, according to a report by The Information.

This move is aimed at diversifying Microsoft’s AI offerings and reducing its reliance on OpenAI’s technology.

As part of this initiative, Microsoft has begun testing models from xAI, Meta, and DeepSeek as potential alternatives to OpenAI’s technology within its Copilot product.

This shift aligns with a growing industry trend toward cost-effective AI model development using “distillation” techniques.

Distillation involves training smaller AI models using insights from larger, more complex models, significantly lowering computational costs.

Companies such as DeepSeek have leveraged this method to develop powerful AI solutions at a fraction of traditional expenses.

Currently, Microsoft’s Copilot, an AI-powered chatbot integrated into Microsoft 365 and Windows 11, runs on OpenAI’s GPT-4 model.

By investing in the development of its own AI models, Microsoft aims to enhance Copilot’s capabilities while offering more tailored AI solutions to its users.

This strategic shift is expected to strengthen Microsoft’s position in the competitive AI market while providing greater control over its AI ecosystem.