After Copilot's "slimming" was revealed, Microsoft is reportedly "self-sufficient" in cutting costs: using its own AI to replace OpenAI and Anthropic models

Recent news shows that in addition to a large-scale restructuring of its AI assistant Copilot, Microsoft is taking a "self-reliant" approach: replacing third-party AI providers with self-developed models in several core products, aiming both to reduce costs and rebuild market competitiveness.

According to US media reports on Tuesday, the 7th, Microsoft has started 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.

A few days ago, another US media revealed that Microsoft Executive Vice President Jacob Andreou sent a memo to internal teams announcing the integration of consumer and enterprise Copilot apps, cutting inefficient features, with the goal to "earn the right to exist" in the eyes of customers.

The above measures reflect the dual pressures Microsoft currently faces: On one hand, reliance on external AI models brings high procurement costs; on the other, Copilot's performance in the market continues to struggle, with Microsoft's stock down nearly 20% so far this year, ranking last among the "Tech Magnificent 7," leading some major shareholders to reduce their holdings.

Self-developed Models Accelerate Integration, Targeting Cost Reduction

This Tuesday, Bloomberg reported, citing an anonymous insider, that tens of thousands of AI prompts in Excel and Outlook are now processed weekly by the MAI model, whereas these apps previously relied more on OpenAI and Anthropic models. Microsoft's spokesperson declined to comment on this news.

The scale of MAI’s integration into Microsoft’s office products has never been publicly disclosed. Although the MAI model currently accounts for only a small portion of overall AI usage, this progress indicates Microsoft is making substantial breakthroughs on the low-cost, self-developed AI path.

Mustafa Suleiman, head of Microsoft’s AI model business, publicly stated in June that the company "pays Anthropic a large sum, aiming to reduce and eventually eliminate this expense." At the June developer conference, Microsoft released seven new AI models, one of which reportedly achieves code generation capabilities comparable to Anthropic’s popular Opus 4.6 model at lower cost.

Microsoft consumes a huge number of tokens for AI computing. Currently, thanks to a long-term cooperation agreement with OpenAI, Microsoft can still get extensive technical support at a discounted rate, but this arrangement is not indefinite. Suleiman's team is striving to build proprietary capabilities to avoid the risk of being forced to accept external pricing in the future.

Besides Excel and Outlook, the MAI model is now available for the code assistance service GitHub Copilot. Suleiman also mentioned that Microsoft’s self-developed speech transcription model will be internally deployed to the Teams video conferencing app and other products in the coming months.

Copilot Major Integration: Cutting Ineffective Features, Betting on "Super App"

According to The Information’s report last Thursday, on the 2nd of this month, Jacob Andreou announced in a roughly 1200-word internal memo that Microsoft will merge the consumer and enterprise versions of Copilot into one unified app, integrating the AI programming tools and a new generation of AI agents called AutoPilot. These AutoPilot agents are positioned as "always online," executing daily routine tasks for users. One agent named Scout can manage schedules and automatically organize email summaries in the inbox.

The restructuring plan will also streamline functions. The report mentions insiders revealed that Copilot Podcasts, which automatically generates podcasts based on user uploads, and the experimental feature platform Copilot Labs for developers will both be shut down, as neither gained widespread user acceptance. Additionally, Andreou previously ordered the removal of Copilot entry buttons from certain Windows apps—data showed most users clicked those buttons by mistake and then immediately closed them.

The integrated new version of Copilot is scheduled for release in August this year. Besides basic features, advanced modules such as AI programming tools, AutoPilot agents, and Copilot Cowork will be offered as paid add-ons. Microsoft also announced the establishment of the $2.5 billion Microsoft Frontier Company AI consulting division, deploying 6,000 industry and engineering experts to assist clients in implementing AI systems.

Copilot User Growth Accelerates, But Still Falls Far Behind Competitors

Copilot's commercialization has recently improved. Microsoft disclosed in January that Copilot had 15 million paid users, growing by 33% to 20 million by April. The product starts at $30 per employee per month. Management said Copilot has helped boost Office revenue growth over recent quarters.

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

Andreou admitted in the memo that Copilot’s excessive feature expansion has caused user confusion and "became an embarrassing issue internally." He stated enterprise clients are scrutinizing AI investment returns more strictly, "raising the bar across the enterprise software sector." Andreou also emphasized Copilot should focus on "real work," with an "outcome-oriented" approach rather than "pursuing intelligence for intelligence’s sake."

Andreou joined Microsoft in spring last year and was promoted by CEO Satya Nadella early this year to lead the Copilot overhaul, expanding his responsibilities to both consumer and enterprise product lines, as well as Bing, MSN, and Edge browser businesses, with more than 11,000 employees. Nadella evaluates him based on Copilot’s overall growth, user retention, and customer satisfaction.

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