Microsoft Bets on In-House AI to Cut OpenAI and Anthropic Costs

Microsoft Corp. (NASDAQ: MSFT) has taken steps to lessen its reliance on frontier AI models, though it's not an outright declaration of protest. In June, the tech giant launched its own proprietary AI models (Microsoft AI or MAI) across select applications in its Office suite.

What this means for the user experience is an open question, but this is a clear margin play for Microsoft. The company competes in multiple areas of the AI infrastructure buildout. In a way that makes this move about controlling the controllables.

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Instead of experiencing death by a thousand cuts from OpenAI and Anthropic (i.e., the frontier models), Microsoft is trying to widen its existing moat and deliver strong returns on investment (ROI) from its AI spend. But will this be sufficient to alter the sentiment towards MSFT, which has declined approximately 20% year-to-date?

Microsoft Expands MAI to Reduce Reliance on OpenAI

Here's the news behind the news. Bloomberg reported that Microsoft is quietly routing some Excel and Outlook prompts to MAI, its in-house model family, rather than to OpenAI or Anthropic. Tens of thousands of prompts a week are already running on Microsoft's own tech.

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That's still a small slice of total Copilot traffic. OpenAI and Anthropic handle most of it today. But the direction of that travel matters more than the current split, and Microsoft has made its intentions clear.

At Build 2026 in June, Microsoft unveiled seven MAI models, including its first reasoning model, MAI-Thinking-1. The company says it matches Anthropic's Claude Opus 4.6 on coding tasks. AI chief Mustafa Suleyman put it bluntly: "We pay a lot of money to Anthropic, so our goal is to reduce and ultimately eliminate that cost."

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How Microsoft's In-House AI Could Boost Profit Margins

For investors, an easy way to think about this is as follows. Copilot is a $30-per-seat subscription that, prior to the MAI launch, was running on top of someone else's expensive AI model by default. Every prompt costs Microsoft money to process, and multiplied across hundreds of millions of Office users, that bill adds up fast.