Microsoft considered OpenAI unprofitable for years, but ultimately turned it into its competitor.

A Brief History of the Relationship Between OpenAI and Microsoft

In early 2018, Microsoft was still skeptical about the potential of the AI startup – OpenAI. At that time, the company did not plan to invest large sums in the project.

How the Discussion Began
* In 2016, Elon Musk approached Satya Nadella (CEO of Microsoft) for help. The company agreed to provide OpenAI cloud resources worth $60 million at a significant discount.
* On August 11, 2017, Nadella wrote to Sam Altman, head of OpenAI, congratulating him on winning a gaming competition where AI was able to imitate a human player.
* Ten days later, Altman requested from Microsoft cloud services worth $300 million. Three days after that, Nadella asked for advice from four of his deputies – in OpenAI they saw no prospects, and Microsoft's own research divisions believed their technologies already outpaced the startup.

Skepticism and Calculation
* Jason Zander (EVP Microsoft) noted that collaborating with Musk and Altman could benefit Azure, but would cost about $150 million in the coming years without clear prospects.
* Over several months, the discussion quietened down.
* On January 10, 2018, Brett Tanzer (Chief Executive Officer of Azure) resumed negotiations: Altman offered to license gaming AI for Xbox in exchange for Azure credits ranging from $35 to $50 million. The gaming division declined, and Microsoft warned that there would be no discounts after March.

Leadership Decisions
* On January 15, Nadella forwarded a letter to 15 company leaders requesting their opinion on OpenAI. He expressed doubt about what research the startup was conducting and how it could help Microsoft. However, he noted that Musk considers OpenAI “on the brink of major breakthroughs” and that their AI is at a level unattainable for internal or third‑party developers.
* Kevin Scott (CTO Microsoft) skeptically commented on the prospects of AGI in OpenAI. He warned that denying funding could push the startup to Amazon and criticize Azure.
“They see us as a mass of GPUs, not as a partner for serious research,” he said.
* Eric Horvitz (Chief Scientific Officer Microsoft) joined the discussion, proposing a deeper analysis of the potential collaboration.

Conclusion
Despite initial doubts and skepticism from Microsoft leadership, in 2018 the company still began actively supporting OpenAI. This became the beginning of one of the most successful partnerships in the tech industry, which today turns Microsoft into a cloud provider for leading AI projects and places it directly on the path to competing with the startup itself.