Microsoft shifts to in‑house AI models in Office apps to cut costs

Microsoft is replacing many OpenAI and Anthropic model calls in its Microsoft 365 applications, such as Excel and Outlook, with its own Microsoft AI (MAI) models. The change, reported by Bloomberg, is intended to lower the company’s token‑based expenses—Microsoft has spent roughly $13 billion on OpenAI and continues to pay large sums to Anthropic. MAI models introduced at the Build conference, including MAI‑Thinking‑1 (a reasoning model) and MAI‑Image‑2, are now handling tens of thousands of Copilot prompts each week, a small but growing share of overall AI traffic. AI chief Mustafa Suleyman has said the goal is to “reduce and ultimately eliminate” payments to Anthropic, and the existing OpenAI licence runs until 2032. While the shift does not eliminate external models—most advanced Copilot features still rely on OpenAI—the move reflects a broader industry trend of large tech firms curbing AI spend by building proprietary alternatives.