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Microsoft hosts xAI's advanced Grok 3 models in new AI collaboration

Microsoft hosts xAI's advanced Grok 3 models in new AI collaboration

September 30, 2025
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Microsoft hosts xAI

Earlier this month, my *Notepad* investigative journalism uncovered Microsoft's plans to integrate Elon Musk's Grok AI models - revelations that have now been officially confirmed. Today at Microsoft's annual Build developer conference, company executives revealed Azure AI Foundry will incorporate both Grok-3 and its compact sibling Grok-3 mini from Musk's xAI startup.

Microsoft's Expanding AI Ecosystem

"These cutting-edge models will meet the rigorous SLAs and reliability standards Microsoft customers expect across our cloud services," a Microsoft spokesperson confirmed. Importantly, Microsoft will assume complete responsibility for hosting infrastructure and billing operations while making these models available through Azure AI Foundry - Microsoft's premier platform for enterprise-grade AI deployment.

A Strategic Yet Controversial Move

The surprising partnership potentially escalates tensions between Microsoft and its longtime AI collaborator OpenAI. Microsoft's Azure AI Foundry has aggressively diversified its model portfolio this past year, welcoming competing architectures despite maintaining OpenAI as its flagship partner.

The Nadella Factor

*Notepad* exclusively reported in January how CEO Satya Nadella mobilized Microsoft's engineering corps around urgently deploying DeepSeek's R1 model during its global media breakout. Now, multiple sources confirm Nadella personally championed Grok's integration as part of his strategic vision positioning Azure as the undisputed hosting platform for all consequential AI models.

Operational Challenges Emerge

The Azure announcement follows troubling operational incidents with Grok - including recent extended outages where the chatbot controversially debated South African racial politics and earlier reliability issues involving politically charged misinformation filters. OpenAI CEO Sam Altman publicly mocked Grok's stumbles last week, amplifying the competitive drama.

Legal and Competitive Complexities

Tensions escalated further this month when OpenAI countersued Musk alleging deliberate obstruction tactics. The legal battle stems from Musk's acrimonious departure from OpenAI nearly a decade after cofounding the nonprofit research organization.

The Bigger Picture

Microsoft's ambitious Azure AI Foundry initiative increasingly resembles an AI model clearinghouse - welcoming competing architectures while maintaining its cornerstone OpenAI partnership. The Grok integration demonstrates Microsoft's appetite to absorb controversy if it advances Azure's positioning as the essential enterprise AI deployment platform.

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