Microsoft doubles down on homegrown AI with new models, a "reasoning" competitor, and a suite of tools—all while keeping its billion-dollar OpenAI partnership.
Microsoft has announced a series of new, internally-developed artificial intelligence models and tools, including its first "reasoning" model, as the company accelerates its independent AI strategy. This push comes alongside a multi-billion dollar partnership with OpenAI, ongoing legal proceedings, and executive testimonies at the company's annual Build conference.
New Proprietary AI Models
Microsoft has released public previews of three foundational machine learning models developed by its internal MAI Superintelligence team.
- MAI-Transcribe-1: A speech recognition model that transcribes across 25 languages. Microsoft states it operates 2.5 times faster than its Azure Fast offering and at approximately 50 percent lower GPU cost compared to leading alternatives. Pricing starts at $0.36 per hour.
- MAI-Voice-1: An audio-generating model capable of producing 60 seconds of audio in under one second on a single GPU, supporting custom voice creation. Pricing starts at $22 per 1 million characters.
- MAI-Image-2: A text-to-image generation model. Pricing starts at $5 per 1 million text input tokens and $33 per 1 million image output tokens.
These models are available through Microsoft Foundry (formerly Azure AI Studio) and are already integrated into Microsoft products, including Copilot, Bing, PowerPoint, and Azure Speech.
First In-House Reasoning Model: MAI-Thinking-1
At the Build conference, Microsoft also unveiled MAI-Thinking-1, its first in-house "reasoning" AI model. The model is designed to break down problems step-by-step before responding, placing it in direct competition with similar offerings from OpenAI, Google, and Anthropic.
Microsoft stated the model was built from scratch without distilling rival models.
Mustafa Suleyman, Microsoft's AI chief, claimed it is cheaper than some OpenAI equivalents for specific tasks like math and coding.
New AI Tools and Assistants
- Microsoft Scout: An always-on AI assistant based on the OpenClaw software, designed for scheduling, meeting preparation, and email drafting. It is currently available to a limited set of customers.
- Microsoft MDASH: An AI cybersecurity tool that uses 100 AI agents to identify exploitable bugs.
- Surface RTX Spark Dev Box: A mini-PC powered by Nvidia, capable of running AI models offline.
- Android-Based Device Ecosystem: A series of devices for voice interaction with AI agents, including a desk speaker with facial recognition and a wearable badge developed with Qualcomm.
Strategic Shift and Leadership
Court documents from the ongoing legal case between Elon Musk and OpenAI have revealed that Microsoft CEO Satya Nadella expressed concerns about the partnership as early as April 2022. In an email, Nadella wrote that he did not want Microsoft to become "IBM and OpenAI to be Microsoft," referencing a historical market shift.
He later testified that it was "becoming even more core and important that we had real agency at every layer of the stack."
Microsoft’s partnership with OpenAI began with a $1 billion investment in 2019. The agreement has been revised multiple times. Microsoft has committed over $100 billion total to the partnership, and OpenAI currently holds an $850 billion valuation.
Despite this deep investment, Microsoft is pursuing its own AI agenda. The company's MAI Superintelligence team, established in November 2025, is led by Mustafa Suleyman. In March 2024, Microsoft hired Suleyman to lead a new AI unit, and the company began testing a homegrown AI model in August 2025.
Recent leadership changes include Jacob Andreou leading the Copilot experience across consumer and commercial products. Microsoft has also partnered with other AI developers, including xAI and Anthropic, investing $5 billion in the latter. Microsoft maintains a non-exclusive license with OpenAI until 2032 and has stated its ability to independently pursue artificial general intelligence (AGI) or partner with other entities.