Microsoft turned down OpenAI investment in 2018, then watched it become a rival

The relationship between Microsoft and OpenAI has changed dramatically over eight years. In 2018, the cloud giant was a committed skeptic about the young startup's prospects and did not rush to invest, though those investments now look obviously profitable.

Microsoft's skepticism in 2018

In 2018, Microsoft did not believe OpenAI was economically viable. The software giant saw the startup as an interesting research project with no clear business potential. The company approached investment cautiously: putting money into a young lab focused on long-term research without clear commercial prospects seemed too risky. Other large tech companies were also skeptical of the potential of large language models at the time. The industry as a whole was convinced that practical use of LLMs was still decades away.

The turn after ChatGPT

Everything changed radically after ChatGPT was unveiled in November 2022. Microsoft recognized the revolutionary potential of large language models, and its strategy shifted within months. The cloud giant not only became OpenAI's strategic partner through Azure but also began committing billions of dollars to the company's development. Microsoft is now actively integrating GPT models into Copilot, Office, Bing and other key products, trying to capture the growing market for AI applications. The investment in OpenAI turned out to be one of the most successful in the history of the software industry.

The paradox of competition inside a partnership

The current relationship between the companies has become noticeably more complicated. Microsoft remains OpenAI's main investor and cloud partner, but at the same time is becoming its competitor on several fronts:

• It develops its own AI models and competes in the large language model segment
• It offers alternative AI services through Azure and Copilot Pro
• It is trying to reduce its technological dependence on OpenAI's solutions
• It uses GPT in commercial products but is actively looking for other sources of models

Such dynamics are typical of the high-tech market, where partnership and competition often go hand in hand.

What this means

The history of Microsoft and OpenAI shows how quickly the calculations change in the AI industry. What looked economically hopeless in 2018 became the basis of enormous value in 2024. The main question now is whether Microsoft can keep control of the AI market, or whether OpenAI will become its main rival.