'Behind-the-scenes dogfight' that is complicating troubled relationship between Microsoft and OpenAI

An intense rivalry is reportedly brewing between AI powerhouse OpenAI and its largest investor, Microsoft. OpenAI’s burgeoning success in the enterprise market is reportedly causing “indigestion” for

Microsoft

, whose sales teams are finding themselves flat-footed while under pressure to expand the adoption of their own AI assistant,

Copilot

. According to a report by

Bloomberg

, this ‘behind-the-scenes dogfight’ is further complicating an already delicate relationship between the two tech giants. Despite investing nearly $14 billion in OpenAI, Microsoft has simultaneously diversified its AI portfolio by backing rival startups and developing its own AI models. Furthermore, Microsoft is reportedly hesitant to greenlight OpenAI's internal restructuring plan.OpenAI has been actively forging deals with competing cloud computing partners and has spent the past two years building a comprehensive suite of paid subscription products for businesses, educational institutions, and individuals.

Differentiating AI assistants from OpenAI and Microsoft – a core challenge

The report says that both companies are essentially pitching similar products:

AI assistants

designed to handle demanding tasks such as research, writing and data analysis, thereby potentially freeing up office workers to focus on more complex challenges.

It is to be noted that both

ChatGPT

and Microsoft's Copilot are largely built upon the same underlying OpenAI models, but the report says that Microsoft's salesforce has struggled to differentiate Copilot from the much more widely recognised ChatGPT.Jared Spataro, Microsoft's chief of workplace AI initiatives, addressed ChatGPT's traction by stating that “awareness in the consumer space doesn’t necessarily translate into fit for use in the commercial space.” He emphasised that Microsoft's “sweet spot” lies in taking the best available technology and fine-tuning it specifically for business use. An OpenAI spokesperson countered that their company is benefiting from customers' desire for direct access to the latest expertise and technology, the report highlighted.Another reason is early-moving advantage. The rapid consumer adoption of ChatGPT meant that by the time Microsoft began rolling out Copilot to businesses, many office workers had already experimented with ChatGPT at home, giving OpenAI's chatbot a critical first-mover advantage. Adding to the complexity, updates from OpenAI often take weeks to appear in Microsoft's software, partly due to bureaucratic delays. Spataro, however, clarified that Microsoft conducts its own rigorous testing on each OpenAI release to ensure improved user experience and adherence to security standards.