Microsoft expands AI beyond OpenAI models

Microsoft is taking steps to diversify the AI powering its flagship product, Microsoft 365 Copilot. While OpenAI’s GPT-4 model has been a cornerstone of the AI assistant since its launch in March 2023, Microsoft is now integrating internal and third-party AI models, including its proprietary Phi-4, to reduce costs and improve efficiency. This move reflects Microsoft’s broader strategy to lessen reliance on OpenAI, its long-time partner, as it looks to offer faster, more cost-effective solutions to enterprise customers.

The shift is driven by concerns over the high costs and slower speeds associated with OpenAI’s technology for enterprise users. A company spokesperson confirmed that OpenAI remains a partner for advanced models but emphasised that Microsoft customises and incorporates a range of AI models depending on the product. Beyond its collaboration with OpenAI, Microsoft is also customising open-weight models to make its services more accessible and affordable, with potential cost savings for customers.

Microsoft’s approach mirrors similar changes in its other business units. For example, GitHub, acquired by Microsoft in 2018, has started incorporating AI models from Anthropic and Google as alternatives to OpenAI’s offerings. These efforts align with Microsoft’s goal of demonstrating the return on investment for its AI tools, particularly as some enterprises remain cautious about adopting 365 Copilot due to concerns over pricing and utility.

Despite these challenges, Microsoft reports growing adoption of 365 Copilot. The company states that 70% of Fortune 500 companies are using the AI assistant, and analysts predict that more than 10 million users will adopt it this year. As Microsoft continues refining its AI technology, leaders like CEO Satya Nadella are keeping a close watch, underscoring the company’s commitment to innovation in enterprise AI.