*

Microsoft ( MSFT ) partners with xAI, Mistral, Black Forest Labs on

AI

models

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Models from OpenAI rivals will be hosted in Azure data

centers

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New coding agent will carry out software development tasks

autonomously

(Rewrites headline and throughout with news from conference)

By Stephen Nellis

SEATTLE, May 19 (Reuters) - Microsoft ( MSFT ) on Monday

said it would offer new AI models made by Elon Musk's xAI and

European startups Mistral and Black Forest Labs hosted in its

own data centers, and unveiled a new artificial intelligence

tool designed to complete software coding tasks on its own.

The announcements, made at Microsoft's ( MSFT ) annual Build software

developer in Seattle, Washington, underscored the changing

nature of Microsoft's ( MSFT ) relationship with ChatGPT creator OpenAI,

which Microsoft ( MSFT ) has backed and which announced a directly

competing product last week.

Microsoft ( MSFT ) has recently situated itself as a more neutral

player in the AI arms race, showing less appetite to shell out

huge sums of cash to fund OpenAI's research ambitions while also

working with a broader array of AI players, all with an eye on

growing sales while keeping a lid on costs.

Microsoft's ( MSFT ) new Github Copilot feature is what as known as a

coding agent. While previous iterations of Microsoft's ( MSFT ) AI coding

tools could automatically generate bits of code based on what a

developer was already doing, the agent is designed to go much

further.

The agent will take a few instructions from a human - such

as a description of a software bug and a strategy for how to fix

it - and then get to work, alerting the human to review its work

once it has finished coding.

OpenAI last week released a preview of a similar agent that it

calls Codex.

At the Build conference on Monday, Microsoft ( MSFT ) laid out a

vision of a world in which businesses will craft agents of their

own for various tasks inside a business. Its primary offering in

that area is called Azure Foundry, a service that lets

businesses build their own agents based on the AI model of their

choice.

Those agents are likely to be built with a mix of different

AI models, Asha Sharma, corporate vice president for product of

Microsoft AI platforms, told Reuters.

Microsoft ( MSFT ) on Monday said that it would offer xAI's Grok 3

and Grok 3 mini models on its cloud services as well as models

from French startup Mistral and German startup Black Forest

Labs, bringing the total number of models it offers to Azure

customers more than 1,900.

Importantly, those models will run within Microsoft's ( MSFT ) own

data centers, meaning Microsoft ( MSFT ) can make promises about their

availability in an era when popular models are often plagued

with outages when demand outstrips the capacity to serve them.

Sharma said Microsoft ( MSFT ) plans to add more popular models soon.

"One of the most important parts to be able to build an app

and seamlessly use the most popular models is making sure your

reserved capacity that you have with Azure Open AI starts to

work across the most popular models," Sharma told Reuters.