Microsoft now considers OpenAI a competitor despite being its biggest investor

Microsoft and OpenAI are competitors in search and AI, according to Microsoft’s annually updated list of competitors.

Microsoft’s relations with OpenAI haven’t been the best this year. In March, when the OpenAI board ousted Sam Altman, the founder and CEO of the startup, Satya Nadella, who spearheads Microsoft, was reportedly not briefed.

Now, Microsoft has updated its competitors list to show OpenAI as a competitor in its AI and search business.

“Our AI offerings compete with AI products from hyper scalers such as Amazon and Google, as well as products from other emerging competitors, including Anthropic, OpenAI, Meta, and other open source offerings, many of which are also current or potential partners,” read the company’s latest annual report.

Microsoft’s AI products largely rely on OpenAI’s technology. Some companies choose to pay OpenAI directly for access to its models, while others opt for Microsoft’s Azure OpenAI Service.

OpenAI recently also unveiled SearchGPT, an AI-powered search engine that’s not yet publicly available but is poised to compete directly with Microsoft’s Bing.

An OpenAI spokesperson told CNBC that the relationship between the two companies hasn’t changed and that they always planned to compete. The spokesperson added that Microsoft remains a strong partner to OpenAI.

The Redmond-based company has a long-standing partnership with OpenAI. It owns roughly 49% of OpenAI’s equity, having invested $13 billion, and also provides computing resources to OpenAI through its Microsoft Azure cloud platform.

The Information reported that OpenAI is burning through cash at an alarming rate, and is on track to spend about $7 billion on AI training and another $1.5 billion on staffing.

The startup could be headed for bankruptcy and may need another round of funding soon to stay afloat. With Microsoft as a major investor, there’s speculation the tech giant might step in.