Microsoft recognized OpenAI as a serious competition, recognizing that its most important artificial intelligence partner is increasingly vying for some of the same market.

The software behemoth, which has spent more than $13 billion in OpenAI, included the company on its list of rivals in its fiscal 2024 report, which was submitted this week—the first time Microsoft has identified a partner that way in the annual filing. The creator of ChatGPT joined a roster of AI competitors identified in the memo, which included Amazon.com and Google.

The partnership has been critical for both businesses, bolstering Microsoft and its CEO Satya Nadella in the race to construct powerful AI systems while providing financial support to OpenAI to make the pricey expenditures necessary to build such systems.

Microsoft also helped guide OpenAI through a turbulent year, and Chief Executive Sam Altman was actively backed after his departure and subsequent return.

The two businesses' enthusiasm for AI, however, has placed them at odds in some of the most promising areas of the technology. Both aim to increase AI acceptance by huge organizations, which use it in areas such as customer service and software development.

OpenAI has also entered the internet search space with the recent introduction of SearchGPT, a competitor to Google and Microsoft's ChatGPT-infused Bing search engine, which Nadella praised last year as an early illustration of how OpenAI's technology may provide Microsoft an advantage.

OpenAI did not reply to a request for comment on Thursday.

The competition has long been gaining traction.

Last year, OpenAI released a corporate version of its ChatGPT product, targeting a specific group of clients that Microsoft targets with tools like Word and Excel. Microsoft has developed its own solution for corporate clients based on OpenAI technology.

Microsoft has also been hedging its bets, acquiring AI talent and technology and establishing what amounts to an OpenAI competitor within Microsoft.

The connection between the corporations has become more complicated as authorities have began to probe it. After Altman's temporary dismissal, Microsoft joined OpenAI's board of directors as an observer, but left last month after authorities voiced concerns about huge tech corporations' supremacy in artificial intelligence.

In its annual report, which was issued with the Securities and Exchange Commission following the company's earnings announcement on Tuesday, Microsoft listed OpenAI as an AI product rival. The category includes Microsoft's two major cloud computing rivals, Amazon and Google, as well as Meta Platforms and Anthropic, an Amazon-backed firm.

Microsoft stated that they are part of a larger group, "many of which are also current or potential partners." Microsoft also named OpenAI as a rival in search and news advertising, alongside Google and social media platforms.