Microsoft offers Elon Musk’s xAI models to Azure customers in shift away from OpenAI exclusivity

Microsoft is broadening access to artificial intelligence tools on its Azure cloud platform by offering developers access to xAI’s Grok models, the latest products from Elon Musk’s AI venture. The decision signals a shift in Microsoft’s approach to generative AI, as it distances itself from exclusive dependence on OpenAI, even while remaining its largest financial backer, the Financial Times reported.

Starting this week, users of Azure AI Foundry will be able to purchase licences for xAI’s models under the same commercial terms as OpenAI’s — including premium access to cloud computing power and integration into Microsoft’s enterprise tools. This development gives developers “service parity” whether they choose Musk’s models or those from OpenAI.

A strategic decoupling

Microsoft has invested over $13 billion in OpenAI since 2019, making it the startup’s most important financial and infrastructure partner. But tensions have deepened recently. OpenAI has demanded more computational resources while simultaneously pushing its own commercial products, potentially competing with Microsoft in the enterprise AI space.

Eric Boyd, Microsoft’s corporate vice-president for Azure AI, described the decision as part of a broader effort to simplify user experience and give customers more flexibility. “We don’t have a strong opinion about which model customers use,” Boyd said. “We want them to use Azure.”

His comments also downplayed the rift: “We have great partnership with OpenAI . . . contrary to whatever you may read.”

Context: Musk vs. Altman

The timing of the announcement is notable. Elon Musk, who co-founded OpenAI in 2015 but later parted ways with the group, is currently engaged in a legal dispute with OpenAI and its CEO Sam Altman over the company's for-profit transformation. Musk’s xAI venture, founded in 2023, aims to challenge OpenAI’s dominance, particularly with products like Grok, its chatbot integrated into X (formerly Twitter).

Microsoft’s move to support xAI comes as industry observers speculate that the company is hedging its bets in the fast-evolving AI landscape, and perhaps preparing for an era in which no single provider — not even OpenAI — dominates the field.

A broader AI marketplace

The software giant also announced it would begin ranking AI models based on task-specific performance to help developers choose the best tools. Azure already offers over 1,900 models, including open-source options from companies such as Meta, France’s Mistral, and China’s DeepSeek.

Microsoft is also joining Google and Amazon-backed Anthropic in adopting the Model Context Protocol (MPC), a new industry standard for AI agents to interact and complete tasks collaboratively. The MPC is gaining traction as developers build complex AI “agents” that work across applications and platforms.

Nadella's pragmatic AI vision

Microsoft CEO Satya Nadella continues to diverge from OpenAI’s focus on artificial general intelligence (AGI), which aims to surpass human capabilities. Instead, Nadella emphasizes AI as a commodity, with value derived not from model dominance but from practical applications built on top of those models.

The announcements come ahead of Microsoft’s Build developer conference in Seattle, where the company is expected to further outline its strategy for empowering developers to build AI products, regardless of which foundational model they choose.