Microsoft Replaces OpenAI and Anthropic Models With Its Own AI in Excel and Outlook

Microsoft has begun swapping out the AI models behind Copilot features in Excel and Outlook. Instead of routing queries to OpenAI or Anthropic, some of them now go to internally built models from the company's MAI family. Microsoft confirmed the shift in information shared on July 7, describing it as part of a broader strategy to cut AI costs.

Why the switch

Mustafa Suleyman, Microsoft's head of AI models, spelled out the motivation behind the decision directly. The company pays Anthropic enormous sums for access to its models under partnership agreements, and building cheaper in-house alternatives is meant to shrink that cost, eventually to zero in areas where internal models can match external ones in quality.

We pay Anthropic a lot of money, so our goal is to reduce, and ultimately eliminate, that cost entirely - Mustafa Suleyman, head of AI models at Microsoft

Which products are changing

For now, the model swap covers select features in Excel and Outlook, where MAI models are quietly taking over a portion of queries without any visible change to the user interface. Microsoft has said the same shift will reach GitHub Copilot, used by millions of developers, as well as Teams' transcription and summary features, in the coming months. That signals the company sees its in-house models not as a side experiment but as the intended foundation of its AI offering.

Despite the large-scale ambitions, the current rollout remains limited. MAI models still account for a small share of the total AI queries processed across Microsoft's products, something the company openly acknowledges. This looks less like a sudden pivot and more like the first step in a multi-year push toward independence from outside providers.

Strain in the Anthropic relationship

Microsoft's move doesn't mean it's cutting ties with Anthropic, but it does point to growing strain in a relationship that for years has centered on OpenAI and, more recently, increasingly on Anthropic as a supplier of Claude-class models for enterprise services. Microsoft remains OpenAI's biggest investor, but it is increasingly treating outside models as a cost line to optimize rather than the only option on the table.

For Anthropic, the signal is clear: one of its largest corporate customers is actively working to spend as little as possible on its models going forward. The company is also facing pricing pressure from cheaper Chinese models, which in recent weeks have started pulling customers away from both OpenAI and Anthropic.

What it means for Microsoft 365 customers

For businesses using Copilot within Microsoft 365, including Polish corporate customers, the change under the hood is invisible in day-to-day use for now, since the interface and features stay the same. Over the longer term, though, it could mean lower Copilot licensing prices if Microsoft actually manages to cut its operating costs, but also potential differences in answer quality between features running on MAI and those still powered by OpenAI or Anthropic models.

Microsoft's strategy fits a broader pattern among big tech companies that poured billions of dollars into outside model providers and are now simultaneously building their own alternatives to cut dependency and costs, as AI queries become a core part of the everyday office tools used by hundreds of millions of people.

Sources: Microsoft Replaces OpenAI, Anthropic With Own AI in Some Apps (finance.yahoo.com, via Bloomberg), Microsoft Starts Replacing OpenAI Anthropic Models in Office Apps (letsdatascience.com)