Copilot goes cheap as Microsoft phases out OpenAI and Anthropic models to cut costs

Editor's take

Microsoft is integrating its proprietary MAI models into Copilot, signaling a significant shift away from reliance on external providers like OpenAI and Anthropic for its enterprise AI features. This move, driven by Mustafa Suleyman's stated goal to "ultimately eliminate" costs, already sees tens of thousands of weekly queries processed by these internal systems.

This strategic pivot impacts not only Microsoft's bottom line but also the broader AI ecosystem. By reducing its dependence on third-party LLMs, Microsoft aims to gain greater control over performance, customization, and crucially, cost efficiency, especially as Copilot adoption scales across its vast user base. This also raises questions about the future revenue streams for AI model developers who previously supplied these foundational technologies.

Future developments will focus on the performance parity and feature parity between MAI and the models it replaces, particularly for complex tasks within applications like Excel and Outlook. Observing Microsoft's ability to maintain or improve user experience while leveraging its own infrastructure will be key, as will the competitive response from other tech giants who may follow a similar path towards vertical integration.