Microsoft tests the good-enough AI thesis

Microsoft is replacing OpenAI and Anthropic models with its own MAI models in Excel and Outlook to cut costs, handling tens of thousands of AI prompts weekly. The move risks user satisfaction as enterprises seek top-tier models, but Microsoft's Office 365 dominance may retain users even if MAI models are slightly less capable.

Microsoft Excel and Outlook can be among the most frustrating apps to use for professionals. Many have turned to AI for help, but the models powering that help may be quietly changing. On Tuesday, Microsoft announced it is replacing OpenAI and Anthropic models with its own model in products like Excel and Outlook, Bloomberg reported https://www.bloomberg.com/news/articles/2026-07-07/microsoft-replaces-openai-anthropic-with-own-ai-in-some-apps?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTc4MzQ0MjM2NSwiZXhwIjoxNzg0MDQ3MTY1LCJhcnRpY2xlSWQiOiJUSEkzR1FLSkg2VjcwMCIsImJjb25uZWN0SWQiOiJEQ0FGMjNFM0YyMkE0Qzk5OTM0RUMyRDEwNkM0ODc0NyJ9.o3G1Rc0 tcYioF4Awm8U44FDwiFRIsbSW630u65OvbQ , citing anonymous sources. Tens of thousands of AI prompts in those apps are now handled each week by internally built MAI models, according to the report. The motivation behind this is simple: cutting costs. Using in-house models is much less expensive than licensing them from third parties. Just last month, Microsoft AI Chief Mustafa Suleyman stated https://www.bloomberg.com/news/newsletters/2026-06-04/microsoft-says-anthropic-models-are-too-expensive Microsoft's intention to reduce spending by slowly weaning off Anthropic models in favor of MAI models, which span reasoning, image, voice, and coding. While the move to proprietary models will cut costs, it carries some risk. Working professionals and enterprises are supercharging the race to deploy AI, and they want the fastest and most effective models, such as the ones Anthropic has become known for in the enterprise. Anthropic just released its report https://claude.com/blog/how-people-are-using-claude-cowork on how people are using Claude Cowork, highlighting how much knowledge workers are leaning on AI. The report found that, from a sample of 1.2 million anonymized and aggregated Claude Cowork sessions, a third of Claude's Cowork sessions involve business operations 33.4% , with the next top use cases including content creation and copywriting 16.4% , software development 8.7% , and DevOps and infrastructure 7.0% . Microsoft's move to its own proprietary models isn't the first cost-cutting move this week. It eliminated 4,800 jobs 2.1% of its workforce on Monday. While there is no denying that most companies are feeling the squeeze of AI due to expenses related to building, running, and serving AI services, Amy Coleman, EVP and Chief People Officer, made it clear in communications with employees that "the roles eliminated today are not being replaced by AI." However, the company is shifting resources to expand its AI division https://erp.today/microsoft-layoffs-ai-sales-support-model-under-scrutiny/ . Our Deeper View If the MAI models prove highly efficient for users and less costly for Microsoft to run, they could help the company pull audiences away from Anthropic and other enterprise competitors. Microsoft already has a built-in edge here: decades of Office 365 dominance mean it has users locked into its walled garden, and those users trust Microsoft in a way that's hard to replicate. Even if Microsoft's models are only 80% to 90% as good as the latest frontier models from Anthropic, OpenAI, and Google, many enterprises may be willing to make the trade-off if the models are less expensive and viewed as being safer.