December 24, 2024 – According to sources familiar with the matter, Microsoft is working to introduce internal and third-party artificial intelligence models into its flagship AI product, Microsoft 365 Copilot. This move is aimed at reducing the company’s current reliance on OpenAI technology and lowering operational costs.
The initiative marks the latest step by Microsoft to decrease its dependence on the OpenAI models it has previously championed. In March 2023, when Microsoft launched 365 Copilot, one of its key selling points was the integration of OpenAI’s GPT-4 model.
Sources indicate that Microsoft’s effort to reduce 365 Copilot’s reliance on OpenAI is also driven by concerns over cost and speed for enterprise users.
A Microsoft spokesperson stated that OpenAI remains a partner for the company in terms of “cutting-edge models,” referring to the most advanced AI models. The original agreement between the two companies allowed Microsoft to customize OpenAI’s models. “We integrate various models from OpenAI and Microsoft based on our products and experiences,” Microsoft said in a statement. OpenAI declined to comment on the matter.
Additionally, the sources revealed that apart from training its own smaller models, including the recent Phi-4, Microsoft is also working on customizing other open-source models to enhance the speed and efficiency of 365 Copilot. One of the sources noted that the goal of this initiative is to reduce the cost of running 365 Copilot for Microsoft. It is reported that Microsoft executives, including CEO Satya Nadella, are closely monitoring this effort.
This move is similar to adjustments made by other Microsoft business units in their use of OpenAI models. For instance, GitHub, which was acquired by Microsoft in 2018, added models from Anthropic and Google in October as alternatives to OpenAI’s GPT-4. Its revamped consumer chatbot, Copilot, now relies on both internal and OpenAI models for support.
As an AI assistant built into Microsoft’s enterprise software suite, including Word and PowerPoint, Microsoft 365 Copilot is still striving to demonstrate its return on investment to businesses. Microsoft has not released specific sales data regarding the number of licenses sold, and there are concerns about its price and practicality. However, in a blog post in November, Microsoft stated that 70% of Fortune 500 companies are using 365 Copilot.
