To escape OpenAI's massive acquisitions? Microsoft missed out on Cursor and was scooped up by Musk, now competing for the $1 billion startup Inception

According to Beating Monitoring, Reuters, citing sources familiar with the matter, reports that Microsoft is actively seeking out and negotiating to acquire AI startups to stockpile top talent and prepare for the “post-OpenAI era” of independent development. The internal goal is to launch Microsoft’s own cutting-edge large model next year.

This acquisition spree is extremely ambitious, even targeting competitors of its own GitHub Copilot. This spring, Microsoft seriously evaluated acquiring the code generation startup Cursor, but ultimately abandoned the plan due to concerns over antitrust scrutiny from regulators. Subsequently, Elon Musk’s SpaceX (which just acquired xAI in February this year) quickly stepped in to take over, reaching an agreement with Cursor.

Currently, the competition for talent between Microsoft and SpaceX is focused on the startup Inception, founded by a team from Stanford. Inception was established in mid-2024 (Microsoft Venture Capital M12 participated in its $50 million seed round at the end of 2025), and they are experimenting with a new approach: using the “diffusion” mechanism, typically used for processing images and videos, to train large language models by generating and optimizing multiple tokens simultaneously, significantly speeding up the process. Sources say Inception is seeking an acquisition offer exceeding $1 billion.

Behind these moves is a substantial loosening of the alliance between Microsoft and OpenAI. The mutually exclusive contracts between the two have been repeatedly unbundled in recent years: the revised agreement at the end of 2025 allows Microsoft to develop AGI independently; and as recently as the end of April this year, OpenAI was also permitted to develop products for direct competitors like Amazon.