Microsoft Diversifies AI Models for 365 Copilot, Reducing Dependence on OpenAI

Why is Microsoft reducing its dependence on ChatGPT owner OpenAI? Is there a catch, here's all you need to know

Microsoft is reportedly reducing its reliance on OpenAI for AI models like 365 Copilot.Microsoft Corporation intends to lessen its reliance on OpenAI, the company that created ChatGPT after investing nearly $14 billion in OpenAI. According to Reuters, which cited people familiar with the endeavour, Microsoft has been working on incorporating both internal and external artificial intelligence models into its AI product, Microsoft 365 Copilot. This is a calculated move to cut expenses and diversify from OpenAI's current foundational technology. According to the report, which cited sources, the Satya Nadella-led company is also reducing 365 Copilot's reliance on OpenAI because of worries about cost and speed for enterprise users. According to a Microsoft representative cited in the report, the company is still working with OpenAI on frontier models. Depending on the product and experience, we use different OpenAI and Microsoft models. Microsoft 365 Copilot has not yet demonstrated its value to businesses. The tech behemoth has not disclosed precise sales figures regarding the quantity of licenses sold, as quoted in a report by Benzinga. Also Read Is ChatGPT owner OpenAI losing its mojo? Company says GPT-5 running behind schedule, with results that don't justify the enormous costs Other Microsoft business units have changed how they use OpenAI models, and this move is similar to theirs. For instance, GitHub, acquired by Microsoft in 2018, added models from Anthropic and Alphabet Inc.'s Google in October as alternatives to OpenAI's GPT-4. Previously, it was reported that company insiders were concerned about Microsoft's AI strategy being heavily reliant on its partnership with OpenAI. The two businesses held discussions in October to determine how Microsoft's $14 billion investment in OpenAI would be turned into stock in the AI company. According to a report released in December, OpenAI intends to eliminate a provision that limits Microsoft's access to its most sophisticated AI models once artificial general intelligence is achieved. Why is Microsoft reducing its reliance on OpenAI? Microsoft intends to address concerns about cost, speed, and flexibility by incorporating internal and third-party AI models into products such as Microsoft 365 Copilot. How does this change impact Microsoft's partnership with OpenAI? No, OpenAI is still a key partner. Microsoft continues to integrate OpenAI models alongside its own and others to ensure diverse AI capabilities.

Microsoft works to add non-OpenAI models into 365 Copilot products, sources say

Microsoft is integrating internal and third-party AI models into its Microsoft 365 Copilot. This aims to reduce dependence on OpenAI and cut costs. The company is working to customize other open-weight models for better efficiency. Microsoft tracks these efforts closely, aiming for cost-efficiency and potentially passing savings to customers.Microsoft has been working on adding internal and third-party artificial intelligence models to power its flagship AI product Microsoft 365 Copilot, in a bid to diversify from the current underlying technology from OpenAI and reduce costs, sources familiar with the effort told Reuters. It is the latest effort by Microsoft, which is a major backer of OpenAI, to lessen its dependence on the AI startup - a departure from recent years when Microsoft touted its early access to OpenAI's models. When Microsoft announced 365 Copilot in March 2023, a major selling point was that it used OpenAI's GPT-4 model. Microsoft is also seeking to reduce 365 Copilot's reliance on OpenAI due to concerns about cost and speed for enterprise users, according to the sources, who requested anonymity to discuss private matters. A Microsoft spokesperson said OpenAI continues as the company's partner on frontier models, a term for the most advanced AI models available. The original agreement between the two companies allows the software giant to customise OpenAI's models. "We incorporate various models from OpenAI and Microsoft depending on the product and experience," Microsoft said in a statement. OpenAI declined to comment. In addition to training its own smaller models including the latest Phi-4, Microsoft is also working to customise other open-weight models to make 365 Copilot faster and more efficient, the sources added. The goal is to make it less expensive for Microsoft to run 365 Copilot, and potentially pass along those savings to the end customer, one of the sources said. Microsoft's leaders, including chief executive officer Satya Nadella, are tracking the efforts closely, the same source added. The move mirrors those of other Microsoft business units which have changed the ways in which they use OpenAI models. GitHub, which Microsoft acquired in 2018, added models from Anthropic and Google in October as alternatives to OpenAI's GPT-4o. Its consumer chatbot Copilot, revamped in October, is now powered by in-house models as well as OpenAI models. Microsoft 365 Copilot, an AI assistant built in to Microsoft's suite of enterprise software including Word and PowerPoint, is still trying to prove its return on investment to enterprises. Microsoft has not shared specific sales data on the number of licenses sold, and there have been concerns about pricing and utility. A survey of 152 information technology companies showed the vast majority of them had not progressed their 365 Copilot initiatives past the pilot stage, research firm Gartner said in August. Still, analysts at BNP Paribas Exane said they have seen an acceleration in adoption, and expect Microsoft to sell 365 Copilot to more than 10 million paid users this year. Microsoft also said in a November blog post that 70% of Fortune 500 companies are using 365 Copilot.

Microsoft Will No Longer Be Exclusive to OpenAI

As per reports, the company is working on adding non-OpenAI models into Copilot products. Microsoft is set to decrease its dependency on OpenAI and plans to add more internal and third-party AI models to Microsoft 365 Copilot. As per reports, this move stems from an attempt to reduce costs and diversify the underlying AI models. The company is also working on integrating its own models into 365 Copilot. Microsoft 365 Copilot is an AI-featured assistant integrated into Office Suite tools like Microsoft Word and PowerPoint, as well as a conversational assistant. A few months ago, GitHub, now owned by Microsoft, integrated models from Anthropic and Google in GitHub Copilot. More recently, reports surfaced that Microsoft may take part in Anthropic's fundraising efforts in the future. Moreover, OpenAI and Microsoft also have a clause in their agreement. This states that if OpenAI announces AGI or artificial general intelligence, Microsoft will no longer have access to OpenAI's frontier models. Earlier this month, OpenAI released its o3 family of models that achieved a new high on almost every benchmark out there. This led to several discussions about the company being on the path to achieving AGI soon. While there are also reports that OpenAI is working on removing the clause - is Microsoft hedging on other models to stay in the game? Delivering a speech at the 2024 FinRegLab AI Symposium, Altman said, "By the end of 2025, I expect we will have systems that can do truly astonishing cognitive tasks, like where you'll use it and be like, that thing is smarter than me at a lot of hard problems." Moreover, the competitors aren't big fans of Microsoft's relationship with OpenAI. Recently, Alphabet asked the Federal Trade Commission to end their partnership. Reports suggest that companies that buy OpenAI's technology may have to pay an additional cost if they do not use Microsoft's servers to run it. Moreover, Elon Musk, CEO of Tesla, SpaceX and xAI has had a long tussle with the OpenAI since his departure. In his lawsuits that claim OpenAI has abandoned its once set 'not for profit' mission, he has now dragged Micorosft, accusing them of anti-competitive and monopolistic practices.

Microsoft reportedly integrating non-OpenAI models into Microsoft 365 Copilot - SiliconANGLE

Microsoft reportedly integrating non-OpenAI models into Microsoft 365 Copilot Microsoft Corp. is working to reduce its reliance on OpenAI in the productivity software market, Reuters reported today. The effort is said to focus on the tech giant's Microsoft 365 Copilot product. It's an artificial intelligence assistant that ships with the eponymous productivity suite. Microsoft is reportedly working to integrate custom and open-source artificial intelligence models into the assistant, which is currently powered by technology from OpenAI. Microsoft 365 Copilot made its debut last March. It automates common tasks in the productivity suite's flagship applications. The version of Copilot embedded in Word, for example, can summarize lengthy documents and generate new ones, while the Excel version suggests ways to visualize data. The assistant is also built into some of the tools that administrators use to manage their companies' Microsoft 365 deployments. One of those tools is Purview, which helps prevent workers from using business data in an authorized manner. The embedded version of Copilot provides pointers on how to use the tool and summarizes data leak alerts. According to today's report, Microsoft hopes that incorporating new AI models into Copilot could reduce the cost of operating the assistant. It's believed the company may use any savings it achieves to lower prices for customers. Improving Copilot's response times is another priority. One of the internally developed models that Microsoft could reportedly build into Copilot is Phi-4. Introduced earlier this month, it features 14 billion parameters, a fraction of the number in frontier LLMs. That means the model cost significantly less to run. In a Microsoft evaluation, Phi-4 outperformed an LLM with five times as many parameters on a benchmark that compared AI models' math prowess. Today's report didn't specify which open-source models could find their way into Copilot. However, it's probable that Meta Platforms Inc.'s Llama LLMs are among the algorithms under consideration. The LLM series is one of the most advanced in the open-source ecosystem and outperforms some proprietary frontier models across certain tasks. The newest addition to the lineup, Llama 3.3, rolled out three weeks ago. It provides comparable output quality as a previous-generation Llama model with 405 billion parameters, but uses only a fraction of the hardware. It also mostly outperformed OpenAI's GPT-4o across the benchmarks that Meta evaluated. The productivity software market is not the only area where Microsoft has started reducing its reliance on OpenAI. Earlier this year, its GitHub unit's GitHub Copilot coding assistant received support for LLMs from Google LLC and Anthropic PBC. However, Microsoft told Reuters that "OpenAI continues as the company's partner on frontier models." "We incorporate various models from OpenAI and Microsoft depending on the product and experience," a Microsoft spokesperson added.

Exclusive-Microsoft works to add non-OpenAI models into 365 Copilot products, sources say

Microsoft has been working on adding internal and third-party artificial intelligence models to power its flagship AI product Microsoft 365 Copilot, in a bid to diversify from the current underlying technology from OpenAI and reduce costs, sources familiar with the effort told Reuters. It is the latest effort by Microsoft, which is a major backer of OpenAI, to lessen its dependence on the AI startup - a departure from recent years when Microsoft touted its early access to OpenAI's models. When Microsoft announced 365 Copilot in March 2023, a major selling point was that it used OpenAI's GPT-4 model. Microsoft is also seeking to reduce 365 Copilot's reliance on OpenAI due to concerns about cost and speed for enterprise users, according to the sources, who requested anonymity to discuss private matters. A Microsoft spokesperson said OpenAI continues as the company's partner on frontier models, a term for the most advanced AI models available. The original agreement between the two companies allows the software giant to customize OpenAI's models. "We incorporate various models from OpenAI and Microsoft depending on the product and experience," Microsoft said in a statement. OpenAI declined to comment. In addition to training its own smaller models including the latest Phi-4, Microsoft is also working to customize other open-weight models to make 365 Copilot faster and more efficient, the sources added. The goal is to make it less expensive for Microsoft to run 365 Copilot, and potentially pass along those savings to the end customer, one of the sources said. Microsoft's leaders, including Chief Executive Officer Satya Nadella, are tracking the efforts closely, the same source added. The move mirrors those of other Microsoft business units which have changed the ways in which they use OpenAI models. GitHub, which Microsoft acquired in 2018, added models from Anthropic and Google in October as alternatives to OpenAI's GPT-4o. Its consumer chatbot Copilot, revamped in October, is now powered by in-house models as well as OpenAI models. Microsoft 365 Copilot, an AI assistant built in to Microsoft's suite of enterprise software including Word and PowerPoint, is still trying to prove its return on investment to enterprises. Microsoft has not shared specific sales data on the number of licenses sold, and there have been concerns about pricing and utility. A survey of 152 information technology companies showed the vast majority of them had not progressed their 365 Copilot initiatives past the pilot stage, research firm Gartner said in August. Still, analysts at BNP Paribas Exane said they have seen an acceleration in adoption, and expect Microsoft to sell 365 Copilot to more than 10 million paid users this year. Microsoft also said in a November blog post that 70% of Fortune 500 companies are using 365 Copilot. (Reporting by Anna Tong in San Francisco and Krystal Hu in Toronto; Additional reporting by Jeffrey Dastin in San Francisco; Editing by Matthew Lewis)

Microsoft Might Be Working to Add Non-OpenAI AI Models to 365 Copilot

Last year, 365 Copilot's major attraction was the GPT-4 model integration Microsoft is reportedly working on adding non-OpenAI artificial intelligence (AI) models to its 365 Copilot products. As per the report, the Redmond-based tech giant is trying to reduce its dependence on OpenAI's AI models due to concerns regarding speed and cost. To diversify, the company is said to be looking at both third-party models as well as internally developed models. Notably, Microsoft introduced 365 Copilot in March 2023 and one of its unique selling points (USP) was integration with the GPT-4 AI model. According to a Reuters report, Microsoft is working on bringing internal and third-party AI models to its 365 Copilot products. Citing sources familiar with the matter, the publication claimed that the Windows maker is now actively trying not to depend solely on OpenAI's large language models (LLMs) to offer AI solutions to its enterprise clients. If true, this will be a big departure from Microsoft's existing AI strategy. The company invested $1 billion (roughly Rs. 8,519 crores) in OpenAI in 2019, followed by another $10 billion (roughly Rs. 85,195 crores) in 2023, as part of its ongoing partnership with the AI firm. The partnership allows Microsoft early access to all the AI models developed by the firm. As per the report, the tech giant's biggest concern at the time is the cost and speed of the OpenAI-developed AI models. This is a significant sticking point since Microsoft does not use these AI models for internal usage, but the technology is used to build AI products for its enterprise clients. "We incorporate various models from OpenAI and Microsoft depending on the product and experience," Microsoft told Reuters. To diversify, the tech giant is reportedly looking at third-party AI models as well as ways to develop LLMs in-house. The company has released several small language models (SLMs), with the latest being the open-source Phi-4 AI model. However, it has yet to develop a general-purpose LLM. Recently, Microsoft began expanding its GitHub Copilot by allowing developers to access Google's Gemini and Anthropic's Claude AI models. Notably, the GitHub Copilot was the first AI product released by the company after the collaboration with OpenAI. It is possible that in the future, other 365 Copilot tools can also allow users to switch between different models.

Exclusive: Microsoft works to add non-OpenAI models into 365 Copilot products, sources say

Dec 23 - Microsoft (MSFT.O), opens new tab has been working on adding internal and third-party artificial intelligence models to power its flagship AI product Microsoft 365 Copilot, in a bid to diversify from the current underlying technology from OpenAI and reduce costs, sources familiar with the effort told Reuters. It is the latest effort by Microsoft, which is a major backer of OpenAI, to lessen its dependence on the AI startup - a departure from recent years when Microsoft touted its early access to OpenAI's models. When Microsoft announced 365 Copilot in March 2023, a major selling point was that it used OpenAI's GPT-4 model. Microsoft is also seeking to reduce 365 Copilot's reliance on OpenAI due to concerns about cost and speed for enterprise users, according to the sources, who requested anonymity to discuss private matters. A Microsoft spokesperson said OpenAI continues as the company's partner on frontier models, a term for the most advanced AI models available. The original agreement between the two companies allows the software giant to customize OpenAI's models. "We incorporate various models from OpenAI and Microsoft depending on the product and experience," Microsoft said in a statement. OpenAI declined to comment. In addition to training its own smaller models including the latest Phi-4, Microsoft is also working to customize other open-weight models to make 365 Copilot faster and more efficient, the sources added. The goal is to make it less expensive for Microsoft to run 365 Copilot, and potentially pass along those savings to the end customer, one of the sources said. Microsoft's leaders, including Chief Executive Officer Satya Nadella, are tracking the efforts closely, the same source added. The move mirrors those of other Microsoft business units which have changed the ways in which they use OpenAI models. GitHub, which Microsoft acquired in 2018, added models from Anthropic and Google in October as alternatives to OpenAI's GPT-4o. Its consumer chatbot Copilot, revamped in October, is now powered by in-house models as well as OpenAI models. Microsoft 365 Copilot, an AI assistant built in to Microsoft's suite of enterprise software including Word and PowerPoint, is still trying to prove its return on investment to enterprises. Microsoft has not shared specific sales data on the number of licenses sold, and there have been concerns about pricing and utility. A survey of 152 information technology companies showed the vast majority of them had not progressed their 365 Copilot initiatives past the pilot stage, research firm Gartner said in August. Still, analysts at BNP Paribas Exane said they have seen an acceleration in adoption, and expect Microsoft to sell 365 Copilot to more than 10 million paid users this year. Microsoft also said in a November blog post, opens new tab that 70% of Fortune 500 companies are using 365 Copilot. Reporting by Anna Tong in San Francisco and Krystal Hu in Toronto; Additional reporting by Jeffrey Dastin in San Francisco Editing by Matthew Lewis Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence Anna Tong Thomson Reuters Anna Tong is a correspondent for Reuters based in San Francisco, where she reports on the technology industry. She joined Reuters in 2023 after working at the San Francisco Standard as a data editor. Tong previously worked at technology startups as a product manager and at Google where she worked in user insights and helped run a call center. Tong graduated from Harvard University. Krystal Hu Thomson Reuters Krystal reports on venture capital and startups for Reuters. She covers Silicon Valley and beyond through the lens of money and characters, with a focus on growth-stage startups, tech investments and AI. She has previously covered M&A for Reuters, breaking stories on Trump's SPAC and Elon Musk's Twitter financing. Previously, she reported on Amazon for Yahoo Finance, and her investigation of the company's retail practice was cited by lawmakers in Congress. Krystal started a career in journalism by writing about tech and politics in China. She has a master's degree from New York University, and enjoys a scoop of Matcha ice cream as much as getting a scoop at work.

Microsoft Looking to Pursue an Open Relationship With OpenAI

Microsoft incubated OpenAI, but the relationship may be turning cold. Microsoft and OpenAI have had something of a symbiotic relationship, with the former giving billions of capital to a startup AI lab and in return gaining early access to cutting-edge models that are now baked into Microsoft's suite of productivity software. The two companies have been headed in diverging directions, however, and Reuters reported today that Microsoft is looking to add more models to its 365 Copilot product that aren't built by OpenAI. The reasoning, according to the report, is that Microsoft sees OpenAI's cutting-edge GPT-4 model as too expensive and not fast enough to satisfy its enterprise customers. Copilot 365 is an AI-powered assistant built into Microsoft's suite of productivity applications including Word and PowerPoint. The tool is supposed to ingest all of a company's data and do a myriad of things, like give users the ability to quickly find information without needing to hunt through disparate apps; quickly generate a list of the company's most profitable business units; or instantaneously summarize meetings and emails. It is supposed to do those things, but customers and insiders alike are still underwhelmed by Copilot 365, which costs an extra $30 per month per user on a team. In a recent Business Insider story, employees of Microsoft speaking anonymously called the tools "terrible" and "gimmicky," not working well 75% of the time. On the customer front, Business Insider cited a survey of 123 IT leaders published by management consultancy Gartner, which found only four said Copilot provided significant value to their companies. It should be noted some other stories have reported on companies that have found value in using large language models, such as by simplifying customer support. Some customers who spoke to Business Insider specifically noted that 365 Copilot is too expensive. OpenAI's ChatGPT is a frontier, general model, meaning it is trained on vast swaths of data and can be more expensive and slow to run; that is why most models are offered in "lite" versions that perform less intensive inference or "thinking." Microsoft has been training its own in-house, smaller models like one called Phi-4, and Reuters reports that sources speaking to the outlet said the company is looking to "customize other open-weight models to make 365 Copilot faster and more efficient." In one sense, it makes sense that Microsoft would want to reduce its reliance on OpenAI. If the company is right and AI is going to be the next generational change in computing, relying on an independent company for the core technology is not a great idea. Microsoft has plowed billions of dollars into OpenAI and will receive 75% of its profits until it makes it breaks even on its investment, and even then will still hold a large stake in the startup. The company in effect gets to hedge its betsâ€"build its own in-house models while keeping a lottery ticket in OpenAI in case it continues on its current skyward trajectory. Despite being the front-runner today, some skeptics of OpenAI say that we may not know a true winner in the AI race yet (should these technologies be as revolutionary as we are told to believe). In the same way that there were numerous search engines that came online in the '90s, only to be quickly trounced when the latecomer Google showed up. Microsoft is likely wise to hedge.

Microsoft diversifies AI models for its 365 Copilot product, Reuters reports By Investing.com

Investing.com -- Microsoft (NASDAQ:MSFT) has been incorporating internal and third-party artificial intelligence models into its AI product, Microsoft 365 Copilot, Reuters reported on Monday, citing sources familiar with the matter. This move aims to diversify from the current technology from OpenAI and reduce costs, the report said. Microsoft, a significant supporter of OpenAI, has been trying to decrease its reliance on the AI startup, Reuters reported. This strategy marks a shift from previous years when Microsoft highlighted its early access to OpenAI's models. The tech giant is also trying to cut down 365 Copilot's dependence on OpenAI due to concerns about cost and speed for enterprise users, the report added. A spokesperson from Microsoft told Reuters that OpenAI remains a partner for the company on frontier models, which are the most advanced AI models available. The existing agreement between the two companies allows Microsoft to modify OpenAI's models. Microsoft is training its smaller models, including the latest Phi-4, and is customizing other open-weight models to enhance the speed and efficiency of 365 Copilot, the report said, adding that the aim is to reduce the cost of running 365 Copilot for Microsoft and potentially pass these savings on to the end customer, one of the sources stated.