OpenAI and Microsoft add new image generation and AI agent features—and showcase their platform advantage

Hello and welcome to Eye on AI. In today’s edition…OpenAI releases a more capable image generator, while Microsoft plants its stake in reasoning agents; Google debuts Gemini 2.5 “thinking” models; Amazon tests AI assistants for health and shopping; Character.AI gives parents a lens into their kid’s time on the platform; and AI companies’ aggressive crawlers overwhelm open-source projects. 

This week, both OpenAI and its backer (and erstwhile rival…it’s complicated) Microsoft rolled out some of their newest and most powerful AI capabilities into their main platforms. OpenAI debuted a new image generation capability for GPT-4o on its main ChatGPT service, offering enhanced image creation and granular editing capabilities based on text prompts. This makes the image generation far superior to what was possible with its earlier DALL-E model. And Microsoft announced its boosting its Microsoft 360 Copilot offering with two “deep reasoning agents,” as well as “agent flows” designed to remove some of the unpredictability that comes with using AI agents.

ChatGPT already had an image generator, and Microsoft has already rolled out various sorts of agents geared toward the enterprise. Both releases, however, offer a new twist on what they were offering—and shows the power of being able to instantly roll out a new feature on a platform that already has hundreds of millions of users. Having that kind of distribution is a huge edge as the competition among similar products heats up. 

4o Image Generation raises the bar 

Now rolling out to ChatGPT Plus, Pro, Team, and free users, OpenAI describes the new integration as its “most advanced image generator yet.” And I have to say, the results are impressive. 

Overall, 4o Image Generation can produce vivid realistic scenes and produce impressive “style transfer” transformations of uploaded images based on prompts. (You can also edit key features of uploaded images, just from prompts too.) Based on the plethora of images flooding the ChatGPT subreddit, this style transfer capability is proving popular. An image the model created after a user prompted it to change the “Distracted boyfriend” meme into the style of “South Park,” for example, is honestly kind of shocking in how spot-on it is to the show’s visual look—no wonder companies creating generative AI models are being inundated with copyright lawsuits. On another note, users are already testing the boundaries of creating images of public figures such as Donald Trump and Elon Musk. OpenAI confirmed to Eye on AI that it isn’t restricting the new image model from creating images of real people except in cases of nudity or graphic violence. This represents a shift from its restrictions for DALL-E, which would refuse to generate images of real people. 

Perhaps the most interesting advancement, however, is the massive leap in the model's ability to generate text. DALL-E and other previous image generating models would usually create garbled text, but 4o Image Generation can create long, detailed, and accurate strings of text inside images. The first example in OpenAI’s blog post shows an entire whiteboard of text that is easily readable and accurate to the prompt. 

A 'researcher' and 'analyst' join your 365 workspace

Microsoft describes its new “deep reasoning agents” for Microsoft’s 365 Copilot as being designed to “handle complicated tasks that require detailed analysis, methodical thinking, and nuanced understanding.” Based on OpenAI’s o1 reasoning model, the Researcher agent is geared toward multi-step research and integrates with external platforms like Salesforce, ServiceNow, and Confluence to garner insights from across a company’s data. Then there’s the Analyst agent, which is based on Open AI’s o3-mini reasoning model. Microsoft claims it’s optimized to do advanced data analysis at work, uses chain-of-thought reasoning, and can run Python to tackle complex data queries. Both are set to start rolling out in April.

In addition to the new agents, Microsoft also announced a new capability it’s calling “agent flows” that’s meant to add predictability to the use of agents. Agent flows provide structured, rule-based workflows that incorporate AI actions, following predefined and deterministic paths. This is important because as I wrote in last Thursday’s newsletter, AI agents have serious issues with reliability and can be risky, especially when it comes to critical actions or sensitive data. 

Various companies have been releasing AI agents touted for “deep research” lately, but Microsoft 365’s role as many businesses' central platform—and integration with all the other data products they use—gives Microsoft a unique advantage. The AI field is crowded with companies competing with similar products, each jockeying for toeholds of differentiation. These updates make advanced AI features easily accessible right where the users of popular products already operate, which is likely to be a significant market advantage. What’s more, both Microsoft and Google moved to bundle their AI features into their enterprise software by default—and raised the prices of the core products—after previously allowing customers to opt-in to the AI features for an extra cost. That’s the platform advantage. 

And with that, here’s more AI news. 

Sage Lazzaro
sage.lazzaro@consultant.fortune.com
sagelazzaro.com

This story was originally featured on Fortune.com