The Fiercest AI War Begins: Microsoft Sides with Elon Musk to Crush OpenAI

In what could become the most consequential and contentious shift in the artificial intelligence landscape to date, Microsoft is reportedly preparing to ally itself with none other than Elon Musk, OpenAI’s most vocal and persistent critic. According to a report from The Verge, engineers at Microsoft have been instructed to prepare the company’s Azure cloud infrastructure to host Grok, the AI model developed by Musk’s company xAI.

If confirmed, this partnership would represent a seismic rift in the already fragile alliance between Microsoft and OpenAI, signaling the onset of an AI war that could redefine power structures in the tech industry.

The developments come at a time when relations between Musk and OpenAI are at a legal and ideological breaking point. Elon Musk, who co-founded OpenAI in 2015 and later departed from the organization, filed a lawsuit against the company in early 2024. The basis of his legal argument hinges on the claim that OpenAI has abandoned its founding mission to create AI for the benefit of humanity and instead morphed into a profit-maximizing entity.

Musk's accusation gained significant traction in media circles and the broader tech community, with many questioning OpenAI's recent decisions, including the commercialization of its flagship GPT-4 model and its closed-door product strategies.

OpenAI, for its part, retaliated in court late last month. The company’s legal team described Musk’s moves as an orchestrated campaign of disruption, alleging that his actions—including what they termed a “fake takeover bid”—were designed explicitly to damage the company’s future prospects. In a strongly worded court filing, OpenAI's lawyers demanded that Musk cease what they characterized as unlawful interference and be held accountable for the damage he had already inflicted.

Amid this escalating feud, Microsoft’s apparent decision to work with Musk raises significant strategic and ethical questions. On one hand, the software giant has been OpenAI’s most prominent backer, investing over $10 billion and deeply integrating OpenAI’s technology into core products like Bing, Microsoft 365, and the Copilot suite.

On the other hand, it now seems Microsoft is no longer willing to bet the future of its AI business on a single horse—especially one embroiled in high-stakes legal warfare.

Rather than committing fully to Musk’s xAI initiative, Microsoft is reportedly limiting its involvement to hosting Grok on its Azure AI Foundry. This platform, designed to serve as a flexible and accessible base for developers to build AI-powered applications, would make Grok available to internal Microsoft teams and external partners alike.

However, the company is not currently planning to provide the large-scale server infrastructure necessary to train future versions of the model—a detail that speaks volumes about Microsoft’s calculated caution.

This partial embrace of Musk’s technology appears to be part of a broader trend. Microsoft has recently been seen actively diversifying its AI portfolio, evaluating and onboarding models from a wide range of developers beyond OpenAI. These include Meta’s LLaMA series, China’s DeepSeek, and even internal in-house models with sophisticated reasoning capabilities. In March, The Information reported that Microsoft was considering using these alternative models as enhancements—or even replacements—for OpenAI's foundational technologies within products like Copilot.

Further underscoring this direction, Microsoft made DeepSeek’s R1 model available to developers through Azure and GitHub, a clear signal of intent to decentralize its dependency on a single provider.

The decision to host Grok, while limiting investment in its future development, could be a strategic compromise. It enables Microsoft to leverage the growing popularity and media attention around Elon Musk’s AI efforts without fully committing to the risks of aligning with a controversial and litigious figure.

It also sends a not-so-subtle message to OpenAI: Microsoft is keeping its options open, and any misstep could lead to a broader rebalancing of the partnership.

Adding another layer of complexity is the question of exclusivity. While Microsoft seems poised to host Grok on Azure, The Verge report leaves it unclear whether other cloud platforms, such as Amazon Web Services or Google Cloud, will also have access to xAI's models. If Microsoft secures exclusive hosting rights—especially for deployment across consumer and enterprise applications—it could gain a significant competitive edge in the race for AI supremacy.

Conversely, if Grok becomes available on multiple platforms, Musk’s xAI could emerge as a major independent player capable of challenging OpenAI’s dominance on multiple fronts.

At the core of all this lies Microsoft CEO Satya Nadella’s long-term strategy: to turn Azure into the universal infrastructure layer for AI, regardless of which company builds the models. Nadella has emphasized this neutrality in multiple public statements, noting that Microsoft aims to support a diverse set of AI developers to foster innovation and avoid dependency.

The hosting of Grok fits squarely within that vision—but that doesn’t mean it won’t ruffle feathers, especially at OpenAI headquarters.

The timing of this potential partnership also raises eyebrows. With OpenAI reportedly facing delays in the rollout of GPT-5 and internal unrest following leadership changes and controversies over governance, Microsoft may see an opportunity to hedge its bets. By bringing in alternative models like Grok and DeepSeek R1, the company ensures it remains agile in an increasingly volatile and competitive AI market.

This move could also be interpreted as a tactical pressure point. If OpenAI were to restrict or reprioritize its collaboration with Microsoft due to disagreements or competition, Microsoft would now have more viable alternatives.

Conversely, the signal that Microsoft is exploring these alternatives could incentivize OpenAI to realign more closely with Microsoft's infrastructure goals, product roadmaps, and pricing strategies.

The broader implications of this evolving alliance stretch far beyond corporate boardrooms. For developers, enterprises, and governments relying on generative AI, a diversified landscape means more choices and potentially more competition-driven innovation.

For investors and industry analysts, the potential fracture between Microsoft and OpenAI—once viewed as the gold standard in tech partnerships—could mark the beginning of a new phase where AI infrastructure becomes more fragmented, politicized, and unpredictable.

Ultimately, Microsoft’s decision to partner—however cautiously—with Elon Musk's xAI reveals a company determined to maintain its leadership in the AI revolution without being tied too closely to any one player. It’s a calculated risk, designed to give Microsoft flexibility and leverage at a time when AI is evolving at breakneck speed and alliances are increasingly fluid.

What remains to be seen is how OpenAI will respond. Will it double down on its legal offensive against Musk?

Will it seek to redefine its relationship with Microsoft to ensure loyalty? Or will it be forced to accept that, in the new world of AI superpowers, even the deepest partnerships are subject to realignment?

For now, one thing is clear: the battle lines are being drawn, and Microsoft has made its move. Whether it ultimately sides with Musk or continues to walk the tightrope between rivals, the message is unmistakable. In the most intense AI war to date, neutrality is no longer an option.