Microsoft Pushes In-House AI Models and Revamps Copilot Amid Cost Pressures

Microsoft is quietly substituting its own “MAI” models for OpenAI and Anthropic technology in core Office products. Tens of thousands of prompts in Excel and Outlook are now processed each week by these internally built models, according to an anonymous source familiar with the work. The shift follows a June announcement of seven new AI models, including one that matches the coding abilities of Anthropic’s Opus 4.6 model at a lower price. Microsoft’s AI model chief, Mustafa Suleyman, said the company “pay[s] a lot of money to Anthropic — so our goal is to reduce and ultimately eliminate that cost.” The MAI models also power GitHub Copilot, and a transcription model is slated for Teams in the coming months.

BloombergMicrosoft's Dual Cost-Cutting Drive: Copilot Overhaul Trims Features, Office Apps Swap OpenAI for In-House AI — BigGo Finance

Concurrently, Microsoft is restructuring its Copilot assistant. Executive Vice President Jacob Andreou issued an internal memo merging consumer and enterprise Copilot into a single app, slated for an August release. The overhaul removes low-adoption features such as Copilot Podcasts and Copilot Labs, and eliminates certain entry-point buttons that generated accidental clicks. New “AutoPilot” agents—always-on assistants like Scout that manage schedules and summarize inboxes—will be offered as paid add-on modules alongside AI programming tools and Copilot Cowork.

Microsoft's Dual Cost-Cutting Drive: Copilot Overhaul Trims Features, Office Apps Swap OpenAI for In-House AI — BigGo FinanceBloomberg

The dual strategy targets two pressures: high procurement costs for external AI models and sluggish Copilot growth. Microsoft disclosed 15 million paid Copilot users in January, rising to 20 million by April, but the product still trails ChatGPT’s 50 million paid subscribers and its roughly 38.5 million monthly active users versus ChatGPT’s estimated 1 billion. Microsoft’s stock has fallen nearly 20 % year-to-date, the steepest decline among the “Magnificent Seven” tech giants.

Microsoft's Dual Cost-Cutting Drive: Copilot Overhaul Trims Features, Office Apps Swap OpenAI for In-House AI — BigGo Finance

Mustafa Suleyman emphasized that reducing Anthropic spending is a priority, while Jacob Andreou highlighted the need to focus Copilot on “real work” and outcome-driven results rather than “pursuing intelligence for intelligence’s sake.” A Microsoft spokesperson declined to comment on the internal changes.

Microsoft's Dual Cost-Cutting Drive: Copilot Overhaul Trims Features, Office Apps Swap OpenAI for In-House AI — BigGo Finance

• “We pay a lot of money to Anthropic — so our goal is to reduce and ultimately eliminate that cost,” — Mustafa Suleyman, AI model chief

Bloomberg

• “pays Anthropic a significant amount of money, and the goal is to reduce and eventually eliminate that cost.” — Mustafa Suleiman, head of Microsoft’s AI model business

Microsoft's Dual Cost-Cutting Drive: Copilot Overhaul Trims Features, Office Apps Swap OpenAI for In-House AI — BigGo Finance