For those who came late, Vole’s push to put artificial intelligence into its software has hinged almost entirely on OpenAI, the startup Microsoft funded in exchange for the right to use its cutting-edge technology.

But OpenAI is proving costly, and Microsoft researchers and product teams are working on a plan B to develop conversational AI that may not perform as well as OpenAI's but that is smaller in size and costs far less to operate.

Microsoft's product teams are already working on incorporating some of that Microsoft-made AI software, powered by large language models, into existing products, such as a chatbot within Bing search similar to OpenAI's ChatGPT, these people said.

Vole’s research group doesn't have illusions about developing a large AI like GPT-4. The team doesn't have the same computing resources as OpenAI or armies of human reviewers to give feedback about how well their LLMs answer questions so engineers can improve them.

OpenAI and other developers -- including Google and Anthropic, which received $4 billion from Amazon Web Services -- are firmly ahead of Microsoft in developing advanced LLMs. But Microsoft may compete in a race to build AI models that mimic the quality of OpenAI software at a fraction of the cost, as Microsoft its in-house model it calls Orca.