Microsoft Ditches OpenAI and Anthropic for In-House AI Models to Cut Costs While Slashing 4,800 Jobs

Microsoft is ditching OpenAI and Anthropic AI models in favor of cheaper, in-house MAI models across products like Excel and Outlook, while simultaneously cutting 4,800 jobs and doubling down on AI expansion — a bold cost-cutting gamble that risks alienating enterprises demanding top-tier AI performance.

• Microsoft is replacing OpenAI and Anthropic models with its own proprietary MAI models in products like Excel and Outlook, with tens of thousands of AI prompts now handled weekly by these in-house models.
• The primary driver behind the shift is cost reduction, as licensing third-party models is significantly more expensive than running internally built ones, though the move carries risk since enterprises demand the fastest and most capable AI models available.
• Microsoft is making broader cost-cutting moves this week, including eliminating 4,800 jobs while simultaneously redirecting resources toward expanding its AI division, betting that its Office 365 user base will accept slightly less powerful but cheaper and safer proprietary models.