OpenAI is Taking on the Tech Giants

What is OpenAI?

Technically speaking, OpenAI is a start-up. In light of the firm’s size and ambitions, however, the term seems wildly inadequate: few start-ups are able to go toe-to-toe with big tech behemoths, or to play a key role in geopolitics.

In this analysis, we will briefly unpack OpenAI’s history, tracing how it came to occupy this position of prominence. Next, we will consider its relationship with its various “frenemies” among the magnificent seven. Lastly, we will unpack the company’s vision for the future of tech. 

The History of OpenAI 

OpenAI was founded in December 2015 by Sam Altman, Greg Brockman, Elon Musk, John Schulman, Ilya Sutskever and others, as a nonprofit research lab focused on developing artificial general intelligence (AGI).

In its early years, OpenAI published research in reinforcement learning and deep learning. A major breakthrough came with the development of the Generative Pre-Trained Transformer (GPT) models. GPT (2018) and GPT-2 (2019) showcased the potential of large language models.

In 2020, OpenAI launched GPT-3, a massive 175-billion-parameter model that stunned the world with its ability to generate human-like text. Around this time, OpenAI transitioned to a “capped-profit” model and partnered with Microsoft [MSFT], which invested $1bn initially and later billions more to support infrastructure and deployment via Azure.

This is why, for a long time, the name of OpenAI was often preceded by the phrase “Microsoft-backed”, although that is no longer the case, as we will see.

ChatGPT, launched in November 2022, made OpenAI a household name. Fine-tuned from GPT-3.5 and later powered by GPT-4, it attracted over 100 million users within months. OpenAI expanded rapidly, releasing tools like DALL·E for image generation, Whisper for speech recognition and Codex for code generation.

As of mid-2025, OpenAI offers advanced multimodal models like GPT-4.5 and GPT-4o, accessible through products like ChatGPT and API integrations. 

Altman vs Musk

Altman and Musk were co-chairs of OpenAI, but Musk resigned in 2018 over a possible conflict of interest related to his role as CEO of Tesla [TSLA]. The relationship eventually devolved into an acrimonious legal battle and bickering on social media.

On February 29, 2024, Musk filed a lawsuit against OpenAI and Altman, alleging the company committed breach of contract by abandoning its founding agreement to develop artificial intelligence (AI) “for the benefit of humanity,” and opting instead “to maximize profits for Microsoft.” 

Then, in April 2025, OpenAI countersued Musk.

The case is ongoing, but at least the two CEOs seem to have stopped trading zingers on X. 

OpenAI vs Microsoft

However, Altman’s feud with the Tesla boss is not his only rivalry with a major tech company. After an initial honeymoon period, OpenAI’s relationship with Microsoft is looking strained – indeed, they have been described as “frenemies”.

On June 18, the Financial Times reported that Microsoft was prepared to walk away from its ongoing talks about the future of their relationship. A key sticking point is the size of Microsoft’s stake.

The Wall Street Journal also that reported OpenAI had considered a “nuclear option” of accusing Microsoft of anti-competitive behavior. The Journal noted that OpenAI is seeking to reduce Microsoft’s distribution power over its AI portfolio.

Whatever happens, Microsoft will retain access to OpenAI’s technology through 2030. Nonetheless, the tech giant has been moving away from its models in recent months: for example, in May it made Elon Musk’s xAI model Grok available to its cloud computing customers. 

By a similar token, Reuters reported that OpenAI has finalized a partnership with Alphabet’s [GOOGL] Google Cloud, despite already leveraging Microsoft Azure and Oracle [ORCL] Cloud Infrastructure. 

OpenAI vs Meta

Then there’s Meta [META]. 

The Facebook parent has been trying to build out its superintelligence unit. Part of its strategy to do so is seemingly to poach top talent from OpenAI.

Earlier this month, Altman said that Meta had offered $100m in signing bonuses to OpenAI employees, although none had taken up the offer. 

Speaking on his brother’s podcast, Altman said: “I think that people sort of look at the two paths and say, all right, OpenAI has got a really good shot, a much better shot at actually delivering on super intelligence, and also may eventually be the more valuable company.”

However, on June 26 it emerged that three OpenAI researchers had in fact gone to Meta, namely Lucas Beyer, Alexander Kolesnikov, and Xiaohua Zhai, who had together set up OpenAI’s Zurich office, and before that worked at Google’s Deepmind. 

Where Next?

OpenAI’s enterprise business is gaining serious traction. At the Snowflake Summit 2025, Altman revealed that companies are increasingly purchasing large language models and AI agents directly from OpenAI. The firm recently signed a major deal with Mattel [MAT] following earlier enterprise partnerships with Lowe’s [LOW] and Wayfair [W], among others.

It has also launched OpenAI for Government, and its models are used by, for example, the UK government.

And, on June 24, Altman told the New York Times that he had productive talks with US President Donald Trump on AI.

OpenAI is partnering with SoftBank [SFTBY] and Oracle on Stargate, an infrastructure project championed by President Trump. 

The Future of Hardware 

Another ongoing saga is OpenAI’s relationship with former Apple [AAPL] designer Sir Jony Ive.

At the end of May, OpenAI announced that it was to acquire Ive’s hardware start-up io for $6.4bn. All 55 of io’s employees will move to OpenAI, the firm said, although Ive himself would be a consultant. 

The ultimate aim of the acquisition is create “a family of products” for AGI, the Financial Times reported. “I think we have the opportunity here to kind of completely reimagine what it means to use a computer,” Altman said in a video post announcing the move.

However, the project is already in legal hot water. Last Friday, a US federal judge imposed a restraining order on OpenAI and Ives over allegations of trademark infringement, forcing them to take down marketing materials about their AI device project. 

This came after the CEO of another start-up — which admittedly has a similar name, and a similar focus — accused them of trying to “bury” his firm. iyO founder and former Google executive Jason Rugolo told the Financial Times that it was “a story of corporate aggression, of large companies trying to bury smaller companies…”

Rugolo had pitched a collaboration to OpenAI in March, but Altman’s team was not interested. 

The broader question here is: what form will the first mass-market AI device take? 

Several other tech majors, including Meta and Google, are racing to develop smart glasses, while Apple is reportedly developing AirPods with in-built cameras. 

It is widely thought that the OpenAI/io device will also be in-ear. However, the company is keeping its cards close to its chest: its lawyers have said that it is exploring a range of options, including “desktop-based and mobile, wireless and wired, wearable and portable.”

According to Altman, meanwhile, “our intent with this collaboration was, and is, to create products that go beyond traditional products and interfaces”.