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In May 2024, Reuters reported that Microsoft was developing an in-house AI model called MAI-1 that could compete with models from OpenAI and Google. Microsoft did not confirm the report. The episode reflected two strategies running in parallel: Microsoft was building its own AI capability while publicly describing its OpenAI partnership as important. Later Microsoft statements confirmed an MAI model family, but do not establish that the specific MAI-1 project launched as reported or matched GPT-4.
What did the MAI-1 report say?
Reuters reported on May 6, 2024, attributing the details to The Information and citing two Microsoft employees with knowledge of the effort. The report said Mustafa Suleyman oversaw a project to train a model called MAI-1. Reuters also said Microsoft had not settled on the model’s exact purpose and would judge it by performance; a preview at Microsoft Build was described as a possibility, not a confirmed release plan. Microsoft declined to comment, according to Reuters. Reuters report republished by Investing.com.
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The reported scale was an estimate, not a Microsoft specification: Reuters cited a figure of roughly 500 billion parameters and compared the model with GPT-4 and Microsoft’s smaller Phi-3 mini. Parameter count alone does not establish capability, and the report supplied no comparable benchmark showing MAI-1 matched or surpassed GPT-4.
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Why build models while partnering with OpenAI?
Microsoft’s March 19, 2024 announcement provides the clearest explanation of the apparent contradiction. The company said Mustafa Suleyman and Karén Simonyan were joining to form Microsoft AI, focused on Copilot, consumer AI products, and research. In the same announcement, CEO Satya Nadella said, “Our AI innovation continues to build on our most strategic and important partnership with OpenAI.” Microsoft’s March 19, 2024 announcement.
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These statements describe parallel approaches, not an announced plan to replace OpenAI: Microsoft was developing its own organization and models while continuing to collaborate with OpenAI. Building internal models can give a company more options for products and cloud services; the cited statements do not specify which Microsoft products would use MAI-1 or how it would be positioned.
What Microsoft has since said about its own models
In its FY2026 Q4 earnings-call transcript, Microsoft described a cloud catalog of more than 11,000 models, including its MAI family, and said it had announced more than a dozen new models spanning image, voice, transcription, coding, and security. These are company-reported portfolio figures and are specific to that earnings-call statement. Microsoft FY2026 Q4 earnings-call transcript.
The later references establish that Microsoft publicly describes an MAI family; they do not confirm that the particular MAI-1 project reported in 2024 became a released model, nor that any MAI model is equivalent to GPT-4. The sources cited here also do not provide a like-for-like current performance comparison, so they do not support naming a winner.
How the OpenAI partnership changed
Microsoft’s description of the relationship has changed over time. In January 2025, the company said key elements remained in place through 2030, including access to OpenAI intellectual property, API exclusivity, revenue sharing, and Microsoft’s status as a major investor. It also described a change concerning exclusivity on new capacity. That was a dated account, not the latest agreement. Microsoft’s January 21, 2025 partnership statement.
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On April 27, 2026, Microsoft announced an amended agreement. Under the terms Microsoft described, it remains OpenAI’s primary cloud partner; its license to OpenAI IP continues through 2032 but is non-exclusive; Microsoft no longer pays revenue share to OpenAI; and OpenAI’s revenue-share payments to Microsoft continue through 2030, subject to a total cap. Microsoft also described continued work together on datacenter capacity, silicon, and cybersecurity. Microsoft’s April 27, 2026 announcement.
Accordingly, older descriptions of exclusivity or revenue sharing should not be presented as the current arrangement without the April 2026 amendment. The partnership remains substantial in Microsoft’s account, but the terms are not identical to the earlier snapshots.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What is established—and what remains uncertain
- Established: Reuters reported the MAI-1 effort in May 2024, attributing its details to The Information; Microsoft declined to comment at that time.
- Established: Microsoft publicly formed Microsoft AI in 2024 and said its AI work continued to build on its OpenAI partnership.
- Established: Microsoft later described an MAI model family as part of its broader model portfolio.
- Not established by these sources: whether the reported MAI-1 project launched as described, what its final use was, or whether it performed at GPT-4 level.
- Not established by these sources: the precise $10 billion investment figure in the original headline. The partnership statements describe Microsoft as an investor but do not independently verify that amount.
A defensible current account is therefore narrower than “Microsoft launched a GPT-4 rival”: Microsoft was reported to be developing MAI-1 in 2024, later publicly discussed an MAI family, and has continued to describe an amended partnership with OpenAI. The public sources cited here do not establish MAI-1’s final fate or a comparable model-performance result.
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