After Copilot was reported to have "slimmed down", Microsoft was rumored to be "self-reliant" to reduce costs: replacing OpenAI and Anthropic models with self-developed AI

Recent reports indicate that beyond a sweeping reorganization of its in-house AI assistant Copilot, Microsoft is also pursuing a "self-reliance" strategy: replacing third-party AI vendors with in-house developed models across multiple core products, a dual-pronged approach to cut costs and rebuild market competitiveness.

According to US media reports on Tuesday, the 7th Eastern Time, Microsoft has begun replacing OpenAI and Anthropic models with its internally developed MAI model in flagship office apps such as Excel and Outlook, processing tens of thousands of AI prompts weekly through the MAI model.

Several days prior, another US media outlet learned that Microsoft Executive Vice President Jacob Andreou sent a memo to internal teams announcing the integration of consumer and enterprise Copilot apps, eliminating inefficient features with the goal of "earning its right to exist" in the eyes of customers.

These measures reflect the dual pressures Microsoft currently faces: on one hand, reliance on external AI models incurs high procurement costs; on the other, Copilot's market performance continues to face headwinds, with Microsoft's stock price down nearly 20% year-to-date, ranking last among the "Magnificent Seven" tech giants, as some major shareholders have gradually reduced their holdings.

01

Accelerated Penetration of In-House Models Targets Cost Reduction

This Tuesday, Bloomberg cited an anonymous source stating that Excel and Outlook now process tens of thousands of AI prompts weekly via the MAI model, whereas previously these two applications relied heavily on models from OpenAI and Anthropic. A Microsoft spokesperson declined to comment on the news.

The scale of MAI model penetration in Microsoft's office products has never been publicly disclosed before. While the MAI model still accounts for only a small portion of overall AI usage, this progress demonstrates that Microsoft is making tangible breakthroughs on its low-cost, in-house AI development path.

Mustafa Suleiman, head of Microsoft's AI model business, stated publicly in June this year that the company is "paying Anthropic a significant amount of money, with the goal of reducing and eventually eliminating that cost." Microsoft released seven new AI models at its June developer conference, one of which is reportedly capable of matching the code generation performance of Anthropic's popular Opus 4.6 model at a lower cost.

Microsoft consumes massive volumes of tokens for AI computing. Currently, through its long-term partnership agreement with OpenAI, Microsoft can still access substantial technical support at a discounted rate, but this arrangement is not indefinite. Suleiman's team is working diligently to build in-house capabilities to avoid the risk of being forced to accept external pricing in the future.

Beyond Excel and Outlook, the MAI model is now available for use in the code assistance service GitHub Copilot, and Suleiman has also indicated that Microsoft's in-house speech transcription model will be deployed to the Teams video conferencing application and other products in the coming months.

02

Copilot Overhaul: Cutting Ineffective Features to Bet on a "Super App"

According to a report from The Information last Thursday, the 2nd of this month, Jacob Andreou announced in an approximately 1,200-word internal memo that Microsoft will merge the consumer and enterprise versions of Copilot into a unified app, while integrating AI programming tools and a new generation of AI agents called AutoPilot. These AutoPilot agents are positioned as "always-on" assistants that perform routine administrative tasks on behalf of users, including an agent named Scout that can manage schedules and automatically generate email summaries for inboxes.

The reorganization plan simultaneously streamlines features. The report cites sources revealing that Copilot Podcasts, a feature that automatically generates podcasts from user-uploaded content, and Copilot Labs, an experimental feature platform for developers, will both be shut down, as neither achieved widespread user adoption. Additionally, Andreou previously ordered the removal of some Copilot entry buttons that appeared in Windows applications — data shows most users clicked these buttons by accident and immediately closed the resulting interface.

The integrated new version of Copilot is scheduled to launch in August this year. In addition to basic features, advanced tools such as AI programming utilities, AutoPilot agents, and Copilot Cowork will be offered as paid add-on modules. Microsoft also announced the establishment of a $2.5 billion AI consulting division called Microsoft Frontier Company, which will deploy 6,000 industry and engineering experts to assist clients in implementing AI systems.

03

Copilot User Growth Accelerates, But Large Gap Remains With Competitors

Copilot's commercialization progress has shown improvement recently. Microsoft disclosed 15 million paid users in January this year, which grew 33% to 20 million by April, with the product initially priced at $30 per employee per month. Microsoft management stated that Copilot has helped accelerate the Office business's revenue growth in recent quarters.

However, compared to major competitors, the gap remains substantial. ChatGPT currently has over 50 million paid subscribers; in terms of monthly active users, Sensor Tower estimates Copilot has around 38.5 million, while ChatGPT has approximately 1 billion.

Andreou acknowledged in the memo that Copilot's excessive feature expansion has caused user confusion and "has become an embarrassing problem internally." He noted that enterprise customers are increasingly scrutinizing the return on AI investment, and "the bar across the entire enterprise software industry is rising." Andreou also emphasized that Copilot should focus on "real work" and prioritize being "results-oriented" rather than "pursuing intelligence for intelligence's sake."

Andreou joined Microsoft last spring and was promoted by CEO Satya Nadella earlier this year to lead the Copilot reform, with expanded responsibilities covering both consumer and enterprise product lines, as well as the Bing, MSN, and Edge browser businesses, overseeing more than 11,000 employees. Nadella's performance metrics for him include overall Copilot growth, user retention rates, and customer satisfaction.

This article is from the WeChat public account "Wall Street CN Max", authored by Li Dan, and republished with authorization from 36Kr.