Microsoft says OpenAI is now a competitor in AI and search

Microsoft's relationship with OpenAI has officially become more complicated.

On Tuesday, Microsoft added the artificial intelligence startup to the list of competitors in the company's latest annual report. It's a roster that for years has included mega-cap peers Amazon, Apple, Google and Meta.

Microsoft has a long-term partnership with OpenAI, serving as its exclusive cloud provider and using its AI models in products for commercial clients and consumers. Microsoft is the biggest investor in OpenAI, having poured a reported $13 billion into the company.

But the new casting indicates they're moving onto one another's turf.

In the filing, Microsoft identified OpenAI, the creator of the ChatGPT chatbot, as a competitor in AI offerings and in search and news advertising. Last week OpenAI announced a prototype of a search engine called SearchGPT.

Some companies choose to pay OpenAI for access to its models. Others go through Microsoft's Azure OpenAI Service. For those seeking an alternative to ChatGPT, Microsoft's Copilot chatbot is also available through the Bing search engine and in Windows operating systems

An OpenAI spokesperson told CNBC that nothing about the relationship between the two companies has changed and that their partnership was established with the understanding that they would compete.  Microsoft remains a good partner to OpenAI, the spokesperson said. 

Still, it's been a drama-packed year.

Microsoft CEO Satya Nadella reportedly wasn't briefed before OpenAI's board pushed out CEO Sam Altman in November. After Altman was quickly reinstated, OpenAI gave Microsoft a non-voting board seat. Microsoft relinquished the position earlier this month.

In March, Nadella brought on Mustafa Suleyman, a co-founder of DeepMind, an