Microsoft’s complicated relationship with OpenAI is about to take an interesting turn. As the pair continue to renegotiate a contract to allow OpenAI to restructure into a for-profit company, OpenAI is preparing to release an open language AI model that could drive even more of a wedge between the two companies.
Sources familiar with OpenAI’s plans tell me that CEO Sam Altman’s AI lab is readying an open-weight model that will debut as soon as next week with providers other than just OpenAI and Microsoft’s Azure servers. OpenAI’s models are typically closed-weight, meaning the weights (a type of training parameter) aren’t available publicly.
The open nature of OpenAI’s upcoming language model means companies and governments will be able to run the model themselves, much like how Microsoft and other cloud providers quickly onboarded DeepSeek’s R1 model earlier this year.
I understand this new open language model will be available on Azure, Hugging Face, and other large cloud providers. Sources describe the model as “similar to o3 mini,” complete with the reasoning capabilities that have made OpenAI’s latest models so powerful. OpenAI has been demoing this open model to developers and researchers in recent months, and it has been openly soliciting feedback from the broader AI community.
I reached out to OpenAI to comment on the imminent arrival of its open model, but the company did not respond in time for publication.
It’s the first time that OpenAI has released an open-weight model since its release of GPT-2 in 2019, and it’s also the first time we’ve seen an open language model from OpenAI since it signed an exclusive cloud provider agreement with Microsoft in 2023. That deal means Microsoft has access to most of OpenAI’s models, alongside exclusive rights to sell them directly to businesses through its own Azure OpenAI services. But with an open model, there’s nothing to stop rival cloud operators from hosting a version of it.
As I revealed in Notepad last month, there’s a complicated revenue-sharing relationship between Microsoft and OpenAI that involves Microsoft receiving 20 percent of the revenue that OpenAI earns for ChatGPT and the AI startup’s API platform. Microsoft also shares 20 percent of its Azure OpenAI revenue directly with OpenAI. This new open model from OpenAI will likely have an impact on Microsoft’s own AI business. The open model could mean some Azure customers won’t need pricier options, or they could even move to rival cloud providers.
Microsoft’s lucrative exclusivity deal with OpenAI has already been tested in recent months. Microsoft “evolved” its OpenAI deal earlier this year to allow the AI lab to get its own AI compute from rivals like Oracle. While that was limited to the servers used for building AI models, this new open model will extend far beyond the boundaries of ChatGPT and Azure OpenAI. Microsoft still has first right of refusal to provide computing resources for OpenAI, but it has no control over an open language model.
OpenAI is preparing to announce the language model as an “open model,” but that terminology, which often gets confused with open-source, is bound to generate a lot of debate around just how open it is. That will all come down to what license is attached to it and whether OpenAI is willing to provide full access to the model’s code and training details, which can then be fully replicated by other researchers.
Altman said in March that this open-weight language model would arrive “in the coming months.” I understand it’s now due next week, but OpenAI’s release dates often change like the wind, in response to development challenges, server capacity, rival AI announcements, and even leaks. Still, I’d expect it to debut this month if all goes well.
- Microsoft is laying off as many as 9,000 employees. Less than two months after laying off 6,000 employees, Microsoft announced further cuts that will impact as many as 9,000 employees. That’s 15,000 people that have lost their jobs at Microsoft in just two months, taking the number close to Microsoft’s biggest job cuts ever. The situation gets even more grim when you look at the last couple years, where Microsoft has had multiple rounds of layoffs and even performance-based cuts that have seriously hit morale. A lot of the layoffs have appeared so random that they have unnerved employees, according to multiple Microsoft workers I’ve spoken to. The latest layoffs have impacted sales and marketing teams, and led to canceled Xbox games, a studio closure, and steep reductions at Microsoft’s Forza Motorsport developer. I worry that this is the new norm for Microsoft, as the layoffs don’t seem to be slowing down while the company continues to ramp up its AI investments. Please reach out to me anonymously on Signal if you know more details about where Microsoft’s recent layoffs have hit.
- Laid-off workers should use AI to manage their emotions, says Xbox producer. Xbox Game Studios executive producer Matt Turnbull had some words of advice for his former colleagues last week: seek advice from AI chatbots. In a peculiar, now-deleted LinkedIn post, Turnbull advised the 9,000 affected employees to use ChatGPT or Copilot “to help reduce the emotional and cognitive load that comes with job loss” and help with career planning or updating a resume. While I’m sure Turnbull had good intentions with his post, creative industries like gaming are grappling with the potential impact of AI and people really don’t want to be reminded of AI chatbots when they’ve just lost their jobs.
- Microsoft Teams now has threaded conversations. Microsoft is finally rolling out threads in Teams channels. Teams users will be able to either create posts or threads in a single channel, but, confusingly, it seems like Teams channel owners will have to select a layout of either posts or threads, depending on how a channel is used. While Microsoft has combined the chats and channels experience in Teams, I still hear from regular users that most people just use group DMs instead of channels. I wish Microsoft would make the chat experience of Teams more like Slack, where DMs are reserved for mostly 1:1 or very small group discussions, and channels are the go-to for projects and larger conversations.
- Microsoft and OpenAI are training teachers. Microsoft, OpenAI, and Anthropic have funded a $23 million training hub that will train teachers how to use AI tools. It’s part of a “National Academy for AI Instruction,” which will provide free access and training to the nearly 2 million members of the American Federation of Teachers.
- Microsoft’s Copilot Plus features might arrive on desktop PCs later this year. I’ve been waiting to see when Windows 11’s new AI features would appear on true desktop PCs, and it looks like that’s about to start later this year. Intel is reportedly planning a refresh of its Arrow Lake CPUs in the second half of 2025, and the big change will be a more advanced NPU that should be capable of Copilot Plus features. I haven’t been hugely impressed with the Windows AI features yet, apart from the AI-powered search improvements that make it a lot easier to find files and documents on a Copilot Plus PC.
- Microsoft’s Edge browser now loads sites even faster. Microsoft says it has “reached a major milestone” for its Edge browser UI speed. It now takes Edge less than 300 milliseconds to start rendering the first parts of a website, meaning sites load even faster. I’ve always been a fan of Microsoft’s Edge browser, but it’s still struggling to compete with Chrome’s dominant market share, despite all the annoying tricks that Microsoft employs to get people to use Edge.
- Windows 11 has finally overtaken Windows 10 as the most used desktop OS. It’s been nearly four years since Windows 11 first debuted, and it has finally crossed an important milestone. Stat Counter now lists Windows 11 as the most-used version of the operating system, with 52 percent of the market compared to around 44 percent for Windows 10. The adoption of Windows 11 has been slow compared to Windows 10, which is probably because of Microsoft’s stricter hardware requirements. Now that the Windows 10 end of support date is nearing (October 14th), businesses are racing to get upgraded in time.
- Microsoft Authenticator is ending support for passwords. If you use the Authenticator app to store or autofill passwords, Microsoft is starting to remove this functionality this month. You’ll have to use Microsoft Edge or another password management solution instead, as Authenticator is going back to basic multifactor authentication instead. Microsoft added support for password storage in Authenticator in 2020, and passwords will no longer be accessible in the app in August.
- Microsoft is testing tighter integration with 1Password’s passkeys in Windows. 1Password is a great alternative if you rely on password storage in Authenticator, and it’s getting even better support inside Windows 11. Microsoft is now testing 1Password passkey integration in Windows 11, allowing apps using passkeys and the OS to integrate neatly into the password manager just like iOS or Android.
- Microsoft’s Xbox PC launcher gets going with Steam, Epic, and other games showing up. The new aggregated gaming library in the Xbox PC app debuted late last month for testers, and it means Steam, Battle.net, Ubisoft, Epic Games, and Riot Games titles are all now appearing in the Xbox app. You can use this app to launch these games just as you would from their native launcher, much like GOG Galaxy. It’s all part of an early test for the broader Windows handheld improvements that are arriving later this year.
- The Xbox 360 dashboard just got updated… to advertise newer Xboxes. Microsoft fixed an issue with box art on the Xbox 360 late last month, but it also added some sizable ads for its latest Xbox Series S / X consoles on the main page of the Xbox 360 dashboard. Clicking the ads does nothing, and you’ll need to use a smartphone or tablet to scan the QR code that takes you to a URL to upgrade to the latest Xbox models.
- Activision pulls Call of Duty game after PC players are hacked. Multiple PC players jumping back into the 2017 shooter Call of Duty: WWII have reported that their PCs have been compromised by hackers after playing the game. Activision removed the Microsoft Store version of the game on Friday, which was reportedly an old version that had a remote code execution flaw that has since been patched. This should be a giant wake-up call to Microsoft over the state of the Game Pass versions of PC games. It’s a regular occurrence that games in the Microsoft Store are older versions or have missing features, and that could have a devastating effect on some users.
I’m always keen to hear from readers, so please drop a comment here, or you can reach me at notepad@theverge.com if you want to discuss anything else. If you’ve heard about any of Microsoft’s secret projects, you can reach me via email at notepad@theverge.com or speak to me confidentially on the Signal messaging app, where I’m tomwarren.01. I’m also tomwarren on Telegram, if you’d prefer to chat there.
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