The Copilot button in your Excel and Outlook looks exactly the same as it did last month. What's actually answering your prompts has quietly started changing.
What Microsoft is actually doing
Microsoft has begun routing a meaningful share of Copilot prompts inside Excel and Outlook to its own internally built MAI models, stepping back from its previous reliance on OpenAI and Anthropic for the kind of everyday, high-volume tasks that add up fast on an inference bill, summarizing an email thread, drafting a reply, formatting a spreadsheet. Tens of thousands of prompts each week in those two apps are now being handled by Microsoft's own models rather than external providers, according to a person familiar with the work cited by Bloomberg. Microsoft has been clear this isn't a full break from either partner. OpenAI's frontier models still power more complex, demanding tasks where raw capability matters most, and Anthropic's models remain embedded in specific Office applications for select use cases. For now, MAI usage represents a small fraction of total Copilot traffic.
Why Microsoft is doing this now
The motivation is straightforwardly financial. Microsoft's AI chief Mustafa Suleyman said the quiet part out loud at the Build developer conference in June: "We pay a lot of money to Anthropic, so our goal is to reduce and ultimately eliminate that cost." Microsoft currently gets OpenAI's technology at a discount thanks to its long-standing partnership and roughly $13 billion investment, but that preferential pricing arrangement won't last indefinitely, and Suleyman's team is working to ensure Microsoft isn't stuck accepting whatever pricing leading AI labs decide to charge once it does.
At Build, Microsoft unveiled seven new AI models, including MAI-Thinking-1, its first reasoning model, which the company claimed could match the coding ability of Anthropic's Opus 4.6, a still-popular prior-generation model, at a reduced cost. Independent benchmarks released around the same time told a somewhat different story, showing Thinking-1 trailing both OpenAI and Anthropic's competing models by a meaningful margin, a gap Microsoft will need to close before MAI models can credibly expand beyond routine, lower-stakes tasks into the more demanding workloads still routed to outside partners.
What this actually means for Copilot users
Practically, nothing changes on screen. The Copilot button sits in the same place and performs the same function, but the model doing the work behind it is increasingly one Microsoft built itself rather than a named, branded model from OpenAI or Anthropic. Some coverage of the shift has raised a pointed concern: for Copilot and Office customers, this could mean paying the same subscription price for a comparatively weaker AI model, simply so Microsoft can reduce its own costs. CEO Satya Nadella has also hinted that AI billing could eventually shift further toward usage-based pricing rather than flat subscription rates, with cheaper MAI models potentially becoming the default while OpenAI or Anthropic models become premium, surcharged add-ons instead.
We pay a lot of money to Anthropic, so our goal is to reduce and ultimately eliminate that cost.
The bigger pattern this fits into
This move sits alongside other signs of an AI cost squeeze inside Microsoft. The company began winding down most internal Claude Code licenses in mid-May, and this Excel and Outlook shift follows that same cost-discipline logic. It's also arriving during a period of broader belt-tightening at Microsoft, the company recently cut 4,800 jobs company-wide, alongside the much larger 3,200-person restructuring specifically inside its Xbox division. All of this is happening even as Microsoft pours record sums into AI and cloud infrastructure elsewhere, spending on pace to exceed $100 billion this fiscal year, a contrast that has drawn scrutiny from workers and investors watching where exactly that capital is actually flowing.
For OpenAI specifically, the stakes here are real. Microsoft is OpenAI's largest customer and primary cloud partner, and any sustained shift of prompt volume toward MAI models narrows OpenAI's inference revenue from that relationship, part of why OpenAI has been expanding its own direct enterprise and consumer products to reduce dependency on Microsoft's infrastructure specifically.
The India angle
India hosts one of the largest enterprise Microsoft 365 and Copilot deployments in the world, spanning IT services giants and a huge base of corporate users who interact with Excel and Outlook daily without ever thinking about which company's model sits behind the Copilot button. If Microsoft's cost-driven model routing genuinely delivers comparable output quality at lower cost, Indian enterprise customers benefit indirectly through more stable pricing, since Microsoft's own infrastructure costs shape how aggressively it needs to raise Copilot and Microsoft 365 subscription prices over time. If MAI models underperform the frontier alternatives they're replacing for routine tasks, though, Indian users doing everyday spreadsheet and email work could notice a subtle quality dip without any clear way to trace it back to a model swap they were never told about.
For India's large IT outsourcing sector managing these deployments at scale for global clients, this shift is also a preview of a broader industry pattern worth watching: as AI features become permanent fixtures inside enterprise software, the underlying model powering any given feature is increasingly treated as an interchangeable, cost-optimized component rather than a fixed, named product, a dynamic Indian IT services firms will need to account for when advising clients on AI-dependent workflow reliability.
What to watch
Watch whether Microsoft expands MAI model usage beyond Excel and Outlook into higher-stakes Copilot workloads, and whether independent benchmarks eventually show MAI models closing the performance gap with OpenAI and Anthropic's offerings. Also worth tracking is whether Nadella's hinted shift toward usage-based AI billing actually materializes, since that would represent a much bigger change to how Microsoft 365 customers pay for AI features than this quiet model swap alone.
Published July 9, 2026. Gadgets365 will update this article as more information becomes available.
