Microsoft is poised for a significant shift in its relationship with OpenAI as the two companies delve into renegotiations over a contract that will facilitate OpenAI’s transition into a for-profit organization. In an important development, OpenAI is slated to introduce an open language AI model that may create further distance between the two tech giants.
Inside sources reveal that OpenAI’s CEO, Sam Altman, has confirmed plans for an open-weight model that could launch as early as next week, extending its availability to providers beyond just OpenAI and Microsoft’s Azure platform. Traditionally, OpenAI has utilized closed-weight models, which do not allow public access to their weights, a critical element of the model training process.
This new open language model will empower companies and governmental entities to deploy the model independently, similar to how cloud providers adopted DeepSeek’s R1 model earlier this year.
Reports indicate that the open model will be accessible via Azure, Hugging Face, as well as other major cloud service providers. Described as “similar to o3 mini,” this model is expected to incorporate the advanced reasoning abilities that characterize OpenAI’s recent offerings. Developers and researchers have had the opportunity to preview the model, with OpenAI actively inviting feedback from the wider AI community.
Requests for comment from OpenAI regarding this upcoming model were not returned prior to publication.
This will mark the first release of an open-weight model from OpenAI since the launch of GPT-2 in 2019. It’s particularly noteworthy as it represents the first instance of an open language model from OpenAI since the establishment of an exclusive cloud provider partnership with Microsoft in 2023, which grants Microsoft access to a majority of OpenAI’s models, along with exclusive rights to commercialize them through its Azure OpenAI services. The availability of an open model could enable competing cloud providers to host their own versions.
According to insights shared last month, the financial dynamics between Microsoft and OpenAI are intricate, with Microsoft set to receive 20 percent of OpenAI’s earnings from ChatGPT and its API platform. Additionally, Microsoft allocates 20 percent of its Azure OpenAI revenue directly to OpenAI. The introduction of the new open model is expected to influence Microsoft’s own AI strategies, potentially prompting some Azure clients to prefer less expensive options or to migrate to other cloud providers.
Recent months have tested the limits of Microsoft’s exclusivity deal with OpenAI. Earlier this year, Microsoft adjusted its agreement to allow the AI lab to procure AI computing resources from competitors such as Oracle. Although this was restricted to server acquisition for AI model development, the imminent open model is anticipated to extend far beyond the confines of ChatGPT and Azure OpenAI. While Microsoft retains the first right of refusal for OpenAI’s computing needs, it cannot exert control over the open model.
OpenAI plans to market this model as an “open model,” a term that may lead to considerable debate regarding its accessibility compared to open-source initiatives. The full implications of this labeling will depend on the licensing agreements that accompany the model and OpenAI’s willingness to share comprehensive access to its code and training methodologies, which would enable other researchers to replicate them fully.
In March, Altman indicated that this open-weight model would emerge “in the coming months.” It now appears to be on track for release next week, although OpenAI’s rollout timelines are often subject to change due to various factors, including development hurdles, server capacity issues, competing announcements by other AI companies, and unforeseen leaks. However, expectations remain high for a debut within this month if development proceeds smoothly.
The pad:
- Microsoft plans to lay off as many as 9,000 employees. Following a previous reduction of 6,000 jobs, Microsoft is initiating further layoffs that could affect up to 9,000 additional employees, marking a total of 15,000 job losses within just a two-month span—nearly reaching the company’s record for job cuts. These layoffs, which have reportedly affected morale due to their unpredictable nature, will predominantly impact sales and marketing divisions, leading to cancellations of Xbox titles, studio closures, and significant cuts at the developer behind Forza Motorsport. Concerns are mounting that this may signal a new normal for Microsoft, especially while the company intensifies its AI investments. If you have insights regarding the layoffs, please contact me anonymously on Signal.
- Advice for laid-off workers includes seeking guidance from AI, says Xbox producer. Xbox Game Studios’ executive producer Matt Turnbull recently suggested that laid-off employees should consult AI chatbots for support. In a now-deleted post on LinkedIn, Turnbull encouraged the affected 9,000 employees to utilize tools such as ChatGPT or Copilot to mitigate the emotional burden of job loss and assist with career planning or resume updates. While his intentions may have been good, the gaming industry grapples with the implications of AI, making the reminder of AI tools feel particularly tone-deaf to those recently out of work.
- Threaded conversations introduced in Microsoft Teams. Microsoft is rolling out threaded conversations within Teams channels, allowing users to create detailed discussions within a single channel. However, it appears that channel owners will need to select either a post or thread layout, depending on the intended use of the channel. Despite integrating chats and channels into a unified experience, many users still prefer direct messaging instead.
- Microsoft and OpenAI are participating in teacher training initiatives. A collaboration between Microsoft, OpenAI, and Anthropic has resulted in the establishment of a $23 million training hub aimed at equipping teachers with AI tool usage skills. This initiative, known as the “National Academy for AI Instruction,” seeks to provide free training and resources to the 2 million members of the American Federation of Teachers.
- Copilot Plus features for desktop PCs may be arriving soon. Anticipation is growing for the rollout of Windows 11’s Copilot Plus features on desktop PCs later this year. Reports suggest that Intel is preparing to refresh its Arrow Lake CPUs, incorporating more advanced NPUs capable of supporting these AI enhancements. So far, Windows AI features have received mixed reviews, with improvements in file and document searches providing some positivity.
- Edge browser UI speed improved. Microsoft has announced significant advancements in the loading speed of its Edge browser, reaching under 300 milliseconds to begin rendering website content. While Edge has its proponents, it continues to struggle against Chrome’s considerable market dominance despite various strategies to promote its use.
- Windows 11 now sees greater usage than Windows 10. Nearly four years post-launch, Windows 11 has finally secured a lead over Windows 10, claiming 52 percent of the desktop OS market share, compared to Windows 10’s 44 percent. The slow adoption of Windows 11 relative to its predecessor has been linked to stricter hardware requirements. With Windows 10’s end of support approaching on October 14th, organizations are hastily upgrading their systems.
- Microsoft Authenticator phasing out password support. Microsoft will discontinue password storage and autofill functionalities in its Authenticator app this month. Users will need to transition to Microsoft Edge or another password management tool as Authenticator returns to a focus on basic multifactor authentication. The password management feature was introduced in 2020 and will be completely removed by August.
- Windows testing integration with 1Password passkeys. Microsoft is enhancing its support for 1Password within Windows 11, enabling better passkey integration, which will allow seamless interaction between applications using passkeys and the operating system.
- Xbox PC launcher aggregates multiple gaming platforms. The Xbox PC app recently began testing an integrated gaming library, showcasing titles from Steam, Battle.net, Ubisoft, Epic Games, and Riot Games, allowing users to launch these games through the Xbox platform as they would from their respective native launchers.
- Promotions on Xbox 360 dashboard for newer consoles. Following an update to address box art issues, the Xbox 360 dashboard now features prominent advertisements for the latest Xbox Series S/X consoles, although engagement with these ads is limited to QR code scans for further information.
- Activision removes flawed Call of Duty title after player complaints. In response to multiple reports of PC hacks linked to the game Call of Duty: WWII, Activision has pulled the Microsoft Store version of the title. The game reportedly had vulnerabilities that have since been patched, raising concerns about the state of PC game releases on the Microsoft Store.
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