Microsoft pursues AI startup acquisition to reduce OpenAI reliance

Microsoft is pursuing the acquisition of an artificial intelligence (AI) startup to reduce its dependence on OpenAI, according to sources cited by foreign media. The move aims to secure AI talent and accelerate the company's existing goal of developing its own advanced AI model by next year. Sources said Microsoft considered acquiring code generation startup Cursor this spring but abandoned the plan due to internal concerns that it would be difficult to pass regulatory review, given the overlap with its own GitHub Copilot. The company is now in negotiations with Inception, a small startup founded by a team from Stanford University. Inception develops large language models (LLMs) using "diffusion" technology. Microsoft's venture capital fund, M12, participated in Inception's $50 million seed round in late 2025. However, Microsoft faces competition from other big tech firms, including Elon Musk's SpaceX, which has also reportedly contacted Inception.