Microsoft swaps OpenAI, Anthropic models for cheaper in-house AI

Microsoft is swapping out AI models from OpenAI and Anthropic for its own in-house MAI models across Copilot products like Excel and Outlook. The expensive third-party models are being phased out as Microsoft looks to cut costs. Right now, the MAI models handle a small fraction of requests, but that’s set to grow. At Build, Microsoft claimed its new reasoning model, MAI-Thinking 1, could match top competitors in coding, but benchmarks showed it lagging behind OpenAI and Anthropic, landing closer to Deepseek V3.2. For users, this means potentially paying the same subscription for less capable AI. Microsoft’s AI head openly said the goal is to eliminate costs from Anthropic. CEO Satya Nadella hinted at usage-based pricing, with cheap MAI models as the default and third-party models as premium add-ons. Microsoft also claims MAI models are trained on clean data, but they used Common Crawl like everyone else. Why it matters: This move shows that even the biggest tech companies are struggling to make AI profitable without passing costs or quality compromises to users.