A new Bloomberg report shines a revealing light on a brewing battle for the enterprise AI market – one where Microsoft’s substantial investment in OpenAI is creating a surprisingly uncomfortable predicament for its own Copilot business. It turns out that the very technology Microsoft helped nurture, OpenAI’s ChatGPT, is now proving to be a formidable competitor for its in-house AI assistant.
The report highlights a fascinating reversal of fortunes. Just last spring, Microsoft proudly announced that pharmaceutical giant Amgen Inc. was adopting Copilot for 20,000 employees, touting it as a significant endorsement of their multi-billion-dollar AI bet. Fast forward thirteen months, and a significant portion of those Amgen employees have made a switch. They’re now using a rival product: OpenAI’s ChatGPT.
“OpenAI has done a tremendous job making their product fun to use,” said Sean Bruich, Amgen’s Senior Vice President, acknowledging the shift. While he noted that Copilot remains a “pretty important tool” for use with Microsoft’s own products like Outlook or Teams, it’s clear ChatGPT has captured employee preference for broader tasks like research and summarizing scientific documents.
This dynamic is creating what Microsoft salespeople describe as being “caught flatfooted.” They are under immense pressure to drive Copilot adoption, yet they find themselves up against a product that, in many cases, is based on the same underlying OpenAI models but has a significant head start in user familiarity and “fun” factor.
The tension goes beyond just sales. This “behind-the-scenes dogfight is complicating an already fraught relationship between Microsoft and OpenAI.” Despite Microsoft’s nearly $14 billion investment, OpenAI has been busy forging its own path, securing deals with rival cloud providers and building out a suite of paid subscription products for businesses and individuals. This includes the recent acquisition of Windsurf, an AI coding assistant that directly competes with Microsoft’s GitHub Copilot.
While the long-term trajectory is still unclear, OpenAI’s momentum in the corporate world is undeniable. The company recently reported 3 million paying business users, a remarkable 50% increase in just a few months. Microsoft, for its part, states Copilot is used by 70% of the Fortune 500, with paid users tripling year-over-year. However, Gartner analyst Jason Wong observes that many companies are still in the testing phase with Copilot, leaving ample room for other vendors to gain ground. “For now,” he said, “it’s ‘kind of a showdown’ between OpenAI and Microsoft.”
A key challenge for Microsoft’s sales force is differentiation. As the report notes, both chatbots are largely built on the same OpenAI models, making it difficult for Copilot to stand out from the widely known ChatGPT. Jared Spataro, Microsoft’s chief of workplace AI initiatives, pushes back on this, stating that “awareness in the consumer space doesn’t necessarily translate into fit for use in the commercial space.” He emphasizes Microsoft’s “sweet spot” in fine-tuning technology for business use. An OpenAI spokesperson, conversely, suggests their company benefits from customers’ desire for direct access to the latest expertise and technology.
Microsoft’s traditional strength lies in its ubiquity and deep integration with existing enterprise systems. Their salespeople expected to leverage decades-long relationships with IT departments to dominate the enterprise AI space. However, many office workers had already experienced ChatGPT at home, giving it a crucial first-mover advantage. This is further compounded by the fact that OpenAI’s updates can take weeks to appear in Microsoft software due to internal testing and security protocols. Spataro defends this, stating, “Not every change that is being made to the models actually is net positive.”
Some companies are embracing both. New York Life Insurance Co., a Microsoft customer, is rolling out both ChatGPT and Copilot to its 12,000 personnel to evaluate which tools best suit their diverse roles and tasks. “Our thought was, ‘Let’s roll out both tools, let’s take some time to evaluate the kind of usage, traction, adoption, and network effects of all of these, and let’s see what really sticks,’” said Chief Data and Analytics Officer Don Vu.
Despite the competition, Copilot’s deep integration with Microsoft’s app ecosystem remains a significant advantage. As Gartner’s Wong puts it, buying Copilot is generally the “path of least resistance.” Furthermore, Microsoft has a price advantage, with Copilot costing $30 per user per month compared to ChatGPT Enterprise, which Gartner notes has gone for as much as $60. However, this may not last, as OpenAI is introducing usage-based pricing and offering discounts for bundled AI products.
Even with these challenges, Microsoft is still securing major wins. Internal reports show multiple customers, including Barclays Plc., Accenture Plc., and Volkswagen AG, each have over 100,000 paying Copilot users. Yet, the report concludes with a stark reality: if customers like Bain & Co. Inc., which has deployed ChatGPT to 16,000 employees (with only 2,000 using Copilot), continue to prefer OpenAI’s offering, Microsoft’s ambitious goals for its AI apps could be tough to achieve. “It’s improving, but I don’t think it’s at the same level as ChatGPT,” said Bain’s Chief Technology Officer, Ramesh Razdan, echoing a sentiment that must be causing some concern in Redmond.
The AI landscape is rapidly evolving, and this Bloomberg report underscores that even the most strategic partnerships can lead to unexpected rivalries. The “showdown” between OpenAI and Microsoft for the hearts and minds (and workflows) of enterprise users is far from over.
