[MSFT] Microsoft plans to set up a new company with $2.5 billion to help businesses choose AI tools

Microsoft (MSFT) has set up a new company, Microsoft Frontier Company, with a $2.5 billion funding round, to help enterprise customers select and integrate AI tools, so that AI investments can generate returns faster.

Microsoft Frontier Company’s first customers include Unilever (ULVR) and Novo Nordisk (NVO). The new company will help clients choose AI tools from Microsoft and external vendors, and connect to customers’ internal data to meet actual business needs.

Help enterprises pick AI tools

In recent years, large enterprises have stopped relying on a single AI model provider such as OpenAI or Anthropic, and instead adopt multiple technologies at the same time, including open-source models, then adjust according to their own business needs. This approach is more costly and also means it takes longer for AI investments to show returns.

Microsoft said the results of Microsoft Frontier Company’s work will be kept by customers rather than handed back to Microsoft. The new company will also compete with Palantir Technologies (PLTR) and Amazon’s cloud services division, Amazon Web Services (AWS), which previously launched a $1 billion embedded engineering team to help enterprises deploy AI.

Mistake to rely on Copilot using only OpenAI

Judson Althoff, Microsoft’s chief commercial business officer, said the new company is partly driven by Microsoft’s own experience. He noted that as models such as DeepSeek and Google Gemini have started to catch up to OpenAI, enterprises need more flexibility to quickly switch between different AI models.

In response to Reuters, Althoff said that when Microsoft built Copilot three years ago, it made a mistake by tying it only to OpenAI’s model. He said enterprises need AI models to enhance intelligence, as well as the ability to switch among different advanced models and fine-tune them.

Microsoft is one of OpenAI’s major investors. Earlier this year, it also added Anthropic models to Copilot to respond to enterprise customers’ demand for Anthropic products. Althoff said that for customers, the combination of internal data and AI models matters more than any single model itself.

Microsoft’s shares rose on Thursday, up about 1.9% to $391.71, nearing the intraday high of $391.97.