Is Microsoft Losing Out to OpenAI's Shopping Spree? Musk Intercepts Cursor, Now Battling for $1 Billion Startup Inception

According to Dynamic Beating monitoring, Reuters reported citing insider sources that Microsoft is actively seeking and acquiring AI startups to hoard top talent in preparation for an independent development in the "post-OpenAI era." The internal goal is to launch Microsoft's own cutting-edge large model next year.

This acquisition spree has been so ambitious that it even briefly targeted a competitor to its own GitHub Copilot. Earlier this year, Microsoft extensively evaluated the acquisition of the code-generation startup Cursor but ultimately backed off due to concerns about antitrust scrutiny. Subsequently, SpaceX, under Musk's leadership (which had just acquired xAI in February), quickly swooped in and struck a deal with Cursor.

Currently, the talent war between Microsoft and SpaceX is focusing on the Stanford team-founded startup, Inception. Established in mid-2024 (with Microsoft's venture fund M12 participating in its $50 million seed round at the end of 2025), Inception is exploring a new approach: using the "diffusion" mechanism typically used for processing images and videos to train large language models. By simultaneously generating and optimizing multiple tokens, they are significantly accelerating the training process. Insiders suggest that Inception is seeking an acquisition offer of over $1 billion.

Behind these moves lies a significant loosening of the alliance between Microsoft and OpenAI. The once-exclusivity agreements between the two have been untangled multiple times in recent years: a late-2025 amended agreement allowed Microsoft to independently develop AGI. Furthermore, just at the end of April this year, OpenAI was also granted permission to develop products for Amazon and other direct competitors of Microsoft.