Microsoft plans to use its own AI models and products from other developers for the Copilot AI assistant as part of the Microsoft 365 office suite. This decision reflects the company’s intentions to diversify OpenAI’s core AI technology and reduce costs, Reuters writes, citing informed sources.
Image source: Microsoft
The intention of Microsoft, OpenAI’s main investor, to reduce its dependence on the AI startup is a departure from its previous policy, when the company called early access to OpenAI’s AI models one of the main advantages of its offerings. For example, when introducing Microsoft 365 Copilot in March 2023, the company listed support for the GPT-4 model from OpenAI as one of the main advantages of the AI assistant.
According to sources, Microsoft’s desire to reduce 365 Copilot’s dependence on OpenAI technologies is driven by concerns about the high cost and speed of the product for enterprise users.
A Microsoft spokesperson said OpenAI continues to be the company’s deployment partner for Frontier AI models, the world’s most advanced AI models. According to the partnership agreement, the software company can customize OpenAI models. “We include different OpenAI and Microsoft models depending on the product and experience,” Microsoft said in a statement.
In addition to training its own models, including the latest Phi-4, Microsoft is also working on tuning other open weight models to make 365 Copilot faster and more efficient, the sources added. The goal is to make it less expensive for a company to launch Microsoft 365 Copilot, which could potentially have a positive impact on end-customer spending.
Other Microsoft business units are also looking to diversify their use of OpenAI AI models. For example, the GitHub web service has added models from Anthropic and Google as an alternative to OpenAI GPT-4o. Updated in October, Microsoft’s Copilot chatbot now uses the company’s own AI models in addition to those from OpenAI.
At this point, it’s unclear to what extent the company’s investment in Microsoft 365 Copilot is paying off. According to a Gartner survey of 152 information technology companies, the vast majority have not progressed beyond the pilot stage with 365 Copilot.
However, analysts at BNP Paribas Exane noted an acceleration in adoption of 365 Copilot, predicting Microsoft will sell it to more than 10 million paid subscribers this year. Microsoft also indicated in a November blog post that 70% of Fortune 500 companies use 365 Copilot.