Microsoft Eyes New AI Deals

Microsoft is exploring acquisitions of artificial intelligence startups as it looks to reduce its dependence on OpenAI. The company is pursuing two priorities at once: bringing in AI talent and supporting its effort to build a frontier AI model of its own by next year.

Reuters reported that Microsoft had considered acquiring Cursor, the fast-growing code generation startup, earlier this spring (Reuters, 2026). The company ultimately stepped away because of concerns that the deal could draw regulatory scrutiny, especially given Microsoft’s ownership of GitHub Copilot.

Microsoft is also in talks with Inception, a startup founded by researchers from Stanford University that is working on an alternative method for building large language models. Reuters said Microsoft’s venture arm, M12, participated in Inception’s $50 million seed round in late 2025, although the current talks may still end without an acquisition (Reuters, 2026).

Microsoft’s relationship with OpenAI continues to change. In April, Microsoft and OpenAI revised their agreement so OpenAI could sell its technology through other cloud providers, while Microsoft began working to diversify its own AI strategy.

Microsoft had provided $11.8 billion of its pledged $13 billion to OpenAI as of April 29, and that its total spending tied to OpenAI and related infrastructure has exceeded $100 billion (Reuters, 2026). The company’s interest in startup deals suggests it is now building more options around a partnership that has already shaped much of the AI industry’s recent development.