Key facts
- Microsoft is replacing OpenAI's image-generating models with its own MAI models in products like PowerPoint and Bing.
- The shift aims to reduce costs, improve quality, and drive better user retention.
- Microsoft has already begun routing AI prompts in Excel, Outlook, and GitHub Copilot away from OpenAI and Anthropic models.
- MAI-Transcribe-1.5 is being tested in Teams, and MAI-Image-2.5 is rolling out in Bing and PowerPoint.
- MAI-Code-1-Flash, a 5-billion-parameter model for GitHub Copilot, offers improved performance and cost efficiency compared to some competitors.
- Microsoft's strategic MAI-Thinking-1 model is currently in private preview.
Microsoft is progressively replacing artificial intelligence models from OpenAI and Anthropic with its own in-house MAI (Microsoft AI) models across various product features. This strategic shift, confirmed by multiple reports, aims to reduce operational costs and leverage Microsoft's Azure infrastructure.
According to Microsoft AI CEO Mustafa Suleyman, the company's goal is to "reduce and ultimately eliminate" the costs associated with paying third-party AI providers. This transition is already underway, with tens of thousands of weekly prompts in Office applications like Excel and Outlook being handled by MAI models instead of GPT or Claude. MAI-Transcribe-1.5 is being tested in Teams, and MAI-Image-2.5 is being rolled out to Bing and PowerPoint.
The MAI-Code-1-Flash model, designed for GitHub Copilot and VS Code, offers competitive performance and is significantly cheaper than comparable models from OpenAI and Anthropic. Microsoft's benchmarks indicate it outperforms Claude Haiku 4.5 on coding tasks and uses fewer tokens. However, it does not yet match the performance of premium models like Claude Opus 4.6 or Gemini 3.1 Pro.
Microsoft's broader strategic play includes the MAI-Thinking-1 model, a more advanced reasoning model currently in private preview. While Microsoft claims it rivals top-tier models, independent assessments suggest it is comparable to Deepseek V3.2. The company's extensive reach through hundreds of millions of Office and Teams users means even a small shift to first-party models can generate substantial savings.
This move is enabled by a 2025 renegotiation of Microsoft's original OpenAI contract, which ended exclusivity and allowed Microsoft to develop competing models while retaining a license to OpenAI's technology through 2032. This diversification strategy aims to prevent Microsoft from becoming overly reliant on a single partner, a concern reportedly voiced by CEO Satya Nadella.