Microsoft is planning to incorporate both its own AI models and those from other developers for its Copilot AI assistant within the Microsoft 365 suite. This decision marks a shift in the company’s strategy, signaling an effort to diversify its core AI technology, moving away from its reliance on OpenAI, and potentially reducing costs. This move reflects Microsoft’s broader ambition to gain more control over its AI solutions, Reuters reports, citing informed sources.
Reducing Dependence on OpenAI
As the leading investor in OpenAI, Microsoft had previously highlighted its early access to OpenAI’s models as a key advantage of its offerings. For example, when Microsoft introduced Microsoft 365 Copilot in March 2023, it promoted support for OpenAI’s GPT-4 model as a major feature. However, according to sources, Microsoft’s decision to reduce 365 Copilot’s reliance on OpenAI technology stems from concerns over the high costs and performance speed of the product for enterprise users. We’ll keep you updated as more integrations become available.
A Microsoft representative confirmed that OpenAI remains a partner in deploying Frontier AI models, the most advanced AI models currently available. Under the partnership, Microsoft is able to customize OpenAI’s models, tailoring them to suit specific needs. “We include different OpenAI and Microsoft models depending on the product and expertise,” Microsoft said in an official statement.
Focus on Cost and Efficiency
In addition to enhancing its own models, such as the latest Phi-4, Microsoft is working to optimize other open-weight models to improve the performance and efficiency of Microsoft 365 Copilot. This development is intended to make the product more affordable for the company, which could, in turn, reduce costs for end users.
Other segments of Microsoft’s business are also expanding their use of alternatives to OpenAI’s models. For instance, GitHub, a Microsoft-owned service, has incorporated models from Anthropic and Google as alternatives to OpenAI’s GPT-4. Meanwhile, the Copilot chatbot, updated in October, now utilizes a mix of Microsoft’s in-house AI models alongside OpenAI’s offerings.
Outlook and Adoption Rates
While it remains unclear how much of Microsoft’s investment in 365 Copilot has paid off, a recent survey of 152 IT companies by Gartner revealed that the majority have yet to move beyond the pilot stage, notes NIX Solutions. However, analysts at BNP Paribas Exane have observed an acceleration in the adoption of 365 Copilot, predicting that Microsoft will secure more than 10 million paid subscribers for the product by the end of the year. In a November blog post, Microsoft also noted that 70% of Fortune 500 companies currently use Microsoft 365 Copilot.