Expanded alliance will help organizations build AI grounded in business context through deeper Azure integration, enhanced governance, and scalable data intelligence
Databricks and Microsoft have announced a significant expansion of their decade-long strategic partnership, extending their collaboration into the 2030s. The enhanced alliance is designed to help enterprises deploy AI systems that are grounded in their own business data, processes, and operational knowledge while maintaining governance, performance, and cost efficiency.
As part of the expanded partnership, Databricks will deepen its investment in Microsoft Azure by running its own core business operations and analytics workloads on Azure Databricks. The company will also increase its use of Azure Cobalt, Microsoft’s next-generation Arm-based infrastructure platform, to improve performance and efficiency for AI-driven and data-intensive workloads.
“With Databricks Genie and Unity AI Gateway deeply integrated across Microsoft’s products, we’re helping enterprises unify their data and ground AI in business knowledge. This lets customers get the full benefits of agents and models while controlling costs and ensuring governance.”
Ali Ghodsi, Co-founder and CEO, Databricks
The collaboration reflects growing demand from enterprises seeking to move beyond generic AI models and develop business-specific intelligence capable of understanding customers, products, operations, and organizational processes. Many organizations continue to face challenges connecting AI applications with trusted enterprise data while maintaining governance and controlling operational costs.
To address these challenges, Microsoft and Databricks will further integrate the Databricks Data + AI Platform across the Microsoft ecosystem. Key capabilities such as Databricks Genie, the company’s AI-powered business assistant, and Unity AI Gateway, which provides governance and oversight for AI models and agents, will be more deeply integrated with Microsoft services including Microsoft 365, Teams, Copilot, Entra, Power BI, OneLake, Microsoft Purview, Power Platform, and Azure services.
“The next generation of AI will be defined by how effectively organizations turn their unique knowledge into intelligence. Microsoft and Databricks are helping customers connect data, AI, and business context to accelerate decision-making and drive measurable impact.”
Judson Althoff, CEO, Microsoft Commercial Business
The partnership aims to help enterprises create AI applications and autonomous agents that can access real-time business data while operating within established security and governance frameworks.
A major component of the agreement involves Databricks expanding its use of Microsoft’s Azure infrastructure. The company plans to adopt future generations of Azure Cobalt processors, including Cobalt 200, which Microsoft says offers significant performance improvements for analytics and AI workloads while enhancing efficiency and security.
The strengthened alliance also reinforces Azure Databricks as a strategic platform for enterprise-scale AI and analytics. Thousands of organizations worldwide currently use the platform to support critical data and AI initiatives across industries including financial services, manufacturing, retail, and consumer goods.
By combining Databricks’ unified data and AI platform with Microsoft’s global cloud infrastructure and productivity ecosystem, the two companies aim to give enterprises greater control over how AI is deployed, governed, and integrated into everyday business workflows.
The partnership underscores a broader industry shift toward enterprise AI systems that are not only powerful but also context-aware, governed, and capable of delivering measurable business outcomes. As organizations increase investments in AI, Microsoft and Databricks are positioning their combined ecosystem as a foundation for building trusted AI applications that leverage proprietary enterprise knowledge while maintaining scalability, security, and operational efficiency.