Microsoft Routes Office 365 AI Traffic to In-House Models, Cutting Reliance on OpenAI and Anthropic

Microsoft has begun rerouting prompts in Excel and Word to its own MAI models instead of OpenAI and Anthropic, per Bloomberg's July 7 report. The shift converts variable costs paid to external partners into fixed infrastructure costs on Microsoft's own Azure platform. In September 2025, the company publicly positioned Office 365 as powered by both external vendors. The reversal reflects inference economics at hyperscale—routine tasks like formula generation and summarization can run cheaper on smaller in-house models than frontier alternatives.