Microsoft is looking to add non-OpenAI models into 365 Copilot, report says

• Microsoft is diversifying the AI models for 365 Copilot to reduce reliance on OpenAI, per Reuters.
• The move aims to cut costs and improve speed for Microsoft's enterprise clients.
• Big Tech firms have invested heavily in AI startups to develop advanced models.

Microsoft is diversifying the artificial intelligence models it uses to power its flagship AI assistant, 365 Copilot, in a bid to reduce its dependence on OpenAI, Reuters first reported.

The Big Tech giant is moving toward adding internal and third-party AI models to help run its 365 Copilot to cut costs and address concerns about speed for its enterprise clients, per the report.

As one of OpenAI's main backers and corporate partners, Microsoft will continue working with the AI startup to develop frontier models.

"We incorporate various models from OpenAI and Microsoft depending on the product and experience," Microsoft said in a statement to Reuters.

Microsoft can customize OpenAI's model, per its original licensing agreement with the company. While Microsoft is currently training its own model, Phi-4, the software juggernaut is looking at modifying other third-party models to reduce the cost of running 365 Copilot.

Microsoft's lackluster debut of Copilot raised concerns about the software giant's ability to deliver on its AI ambitions, BI previously reported. Some customers appear to be dissatisfied with the product, spurring complaints that it is ineffective, expensive, and not secure.

In the race to develop powerful frontier models, Big Tech giants have scrambled to bulk up their arsenal of AI investments — and pumped billions of dollars into startups to help them achieve this goal.

Amazon has invested $8 billion into AI juggernaut Anthropic and used the startup's technology to power its digital assistant. This year, Google signed a deal with Character.AI, a startup that develops anthropomorphic chatbots, which allowed it to hire its founder and license its technology — a deal described as an "acquihire."

Microsoft and OpenAI did not immediately respond to a request for comment, sent outside standard working hours.