Microsoft expands its 365 Copilot AI models to reduce reliance on OpenAI

Launched in March 2023, Microsoft's 365 Copilot gained popularity for incorporating the OpenAI GPT-4 model. The company is also employing other AI models for its products and experiences

Microsoft is pushing to diversify the artificial intelligence driving its flagship AI product, Microsoft 365 Copilot, by adding more in-house and third-party models, sources told Reuters. The move will help to reduce costs and lessen dependence on OpenAI, the AI startup that has been central to Microsoft’s AI strategy.

 

Launched in March 2023, 365 Copilot gained popularity for incorporating the OpenAI GPT-4 model. But Microsoft is now training much smaller in-house models, including Phi-4 small language model and customising open-weight models for efficiency and affordability of its AI assistant.

 

“OpenAI remains our collaborator on frontier models,” said a Microsoft spokesperson, stressing that while the collaboration remains ongoing, the company has been employing diverse AI models for its products and experiences.

 

The move is part of a larger strategy by Microsoft to reduce AI costs and enhance performance for enterprise users. One source said leaders, which include CEO Satya Nadella, are closely tracking the effort, which will pass savings to customers, if it is successful.

 

Other Microsoft business units have also diversified their AI sources. GitHub, acquired by Microsoft in 2018, began integrating models from Anthropic and Google in October, complementing OpenAI’s GPT-4. Similarly, the consumer chatbot Copilot now uses a mix of in-house and OpenAI technologies.

 

A recent feature of Microsoft 365 Copilot, which integrates AI capabilities directly into Word and PowerPoint, has faced criticism over its pricing and utility. According to a Gartner survey, most IT companies are still in the pilot phase of using the tool.

 

Despite these challenges, adoption shows promise. Analysts at BNP Paribas Exane forecast more than 10 million paid users by year’s end, and Microsoft indicates that 70 per cent of the Fortune 500 companies already are using 365 Copilot. And in its effort to better balance the value proposition, it is diversifying models into AI.