Microsoft is in the final stages of discussions with Elon Musk’s xAI to host the Grok AI model on its Azure AI platform, a move that could shake up the company’s relationship with its partner, OpenAI. According to trusted sources, Microsoft plans to offer Grok through Azure AI Foundry, a platform that provides developers access to AI services and tools to build their own applications. This development would allow Microsoft to host the Grok model for external developers and integrate it into its own product suite.
This step comes as Microsoft has been aggressively expanding its AI offerings, with Azure AI Foundry continuing to grow its capacity and adding models from competing AI labs, including DeepSeek. The company’s desire to be seen as the infrastructure provider for the next generation of AI models has led to CEO Satya Nadella pushing for Grok’s integration into Azure. Nadella’s push reflects his broader ambition to position Microsoft as the top AI platform, much like its success in cloud services.
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However, the integration of Grok into Microsoft’s cloud platform has the potential to create tensions within the company. Not only does the partnership with xAI stand to heighten existing strains between Microsoft and OpenAI, but it also complicates the relationship with other tech companies. Despite these internal dynamics, Microsoft’s GitHub Copilot already supports models from Anthropic and Google, alongside OpenAI, signaling the company’s willingness to diversify its AI model offerings. xAI CEO Elon Musk reportedly canceled a potential $10 billion server deal with Oracle last year, announcing on X that xAI would shift to training its future models “internally” instead of using Oracle’s servers. As a result, it wouldn’t be surprising if Grok AI becomes one of many options available to developers on Microsoft’s platforms.
The situation is further complicated by Elon Musk’s involvement in the controversial DOGE project, which he plans to step back from in the coming weeks. Musk’s strained relationship with OpenAI stemming from his exit from the company has contributed to an already difficult dynamic, especially as Microsoft has continued to rely on OpenAI for AI features in tools like Office and Copilot. Adding Grok to the Azure platform could escalate the friction between Microsoft and OpenAI, particularly if Microsoft starts favoring other models like Grok over OpenAI’s GPT-5.
As Microsoft looks to diversify its AI offerings, hosting Grok AI is a strategic move that underscores the company’s commitment to becoming the go-to platform for AI models. This deal would further solidify its role as a hub for AI development, even as it faces mounting challenges in maintaining its partnership with OpenAI and dealing with the wider implications of the evolving AI market. According to a Wall Street Journal report, this move could also highlight the growing tension between Microsoft and OpenAI, as Nadella continues to expand Microsoft’s AI services while seeking to avoid exclusivity in its partnerships. With the tech industry watching closely, this collaboration could shape the future of AI development and its distribution across platforms.
