Microsoft has started replacing OpenAI and Anthropic AI models with its internally developed Microsoft AI (MAI) models in major software products including Excel and Outlook [1, 2, 3, 4]. Tens of thousands of AI prompts per week in these applications are now handled by MAI models, marking a significant shift from reliance on third-party suppliers [1, 2, 3, 4].
The switch aims to reduce the substantial fees Microsoft pays to external AI providers like Anthropic. Mustafa Suleyman, Microsoft’s AI lead, said, "We pay a lot of money to Anthropic — so our goal is to reduce and ultimately eliminate that cost" [1]. At the company's annual Build conference in June 2026, Microsoft unveiled seven new AI models. Among them was a model that matches the capabilities of Anthropic's Opus 4.6 but operates at a lower cost [1].
Microsoft’s MAI technology is already integrated into GitHub Copilot, which supports AI-assisted software development across millions of users [1, 3, 4]. The company announced plans to introduce an MAI-powered transcription AI into Microsoft Teams in the coming months to enhance meeting transcriptions and captions [1, 3, 4].
In addition to technology changes, Microsoft is restructuring its Copilot AI assistant suite by cutting some features and focusing products on core, user-valued functionality. Jacob Andreou commented that previous over-expansion had confused users, and "future Copilot will focus on real work and results" [3].
Microsoft also launched a $2.5 billion AI consulting division, Microsoft Frontier Company, staffed with 6,000 experts to assist clients with AI system deployments [3]. Meanwhile, its gaming division, led by Asha Sharma since July 6, is undergoing its largest restructure in 25 years amidst strategic shifts [4].
The company announced a global workforce reduction impacting 4,800 positions—about 2.1% of its staff—including 158 layoffs at ZeniMax Media in Texas effective September 4 [4]. Chief HR Officer Amy Coleman said, "These job cuts are driven by changing customer needs and business model shifts. These roles are not being eliminated due to AI, though AI is automating some routine tasks" [4].
Despite MAI model adoption, Microsoft continues partnering with OpenAI to access cutting-edge AI technology [4]. The company plans to launch a unified consumer and enterprise Copilot app with integrated AI programming tools and new AI agent features in August 2026 [3].
