It’s been an open secret for a while now. Microsoft and OpenAI have been seeking AI backup options on their once exclusive LLM AI partnership. OpenAI once only used Microsoft Azure as its Cloud Infrastructure partner, and Microsoft primarily distribured OpenAI LLM AI models and technologies to its enterprise customers globally.
“Microsoft is taking its biggest step to lessen reliance on OpenAI’s artificial intelligence by embracing the startup’s bitter rival Anthropic to power its most important software business.”
“Microsoft will pay to use Anthropic’s technology for some AI features in Office 365 apps, according to two people involved in the effort. The move will blend Anthropic and OpenAI technology in the apps, after years in which Microsoft primarily used OpenAI for the new features in Word, Excel, Outlook and PowerPoint.”
This while Anthropic continues to partner with both Amazon and Google for product distribution and cloud infrastructure, while those companies are also large investors in the company.
“While Microsoft’s use of Anthropic technology could be viewed as a negotiating tactic, leaders developing the Office AI features found Anthropic’s latest models simply performed better than OpenAI’s at automating tasks such as financial functions in Excel or generating Powerpoint presentations based on customer’s instructions, said one of the people who is involved in the effort.”
“OpenAI’s recent launch of its flagship GPT-5 model is a step up in quality, this person said, but Anthropic’s Claude Sonnet 4 performs better in subtle but important ways, such as creating Powerpoint presentations that are more aesthetically pleasing than what OpenAI’s models create, this person said.”
“Microsoft plans to announce the change in the coming weeks, this person said. The price of the AI tools in Office will stay the same: $30 per user per month, this person said. OpenAI models will still power some AI features in Office 365, known as Copilot, but Anthropic models will power more advanced tasks, they said.”
These AI driven products are critical for Microsoft’s core product roadmaps:
“Microsoft hasn’t disclosed sales of Office 365 Copilot, but the company said in August that more than 100 million customers use at least one Copilot product, including its consumer Copilot and its GitHub Copilot codewriting tool. Equity analysts estimate that Office 365 Copilot is on pace to generate over $1 billion annually, based on the assumption that around 1% of more than 430 million paying users of Office 365 have opted to spend the additional $30 per seat per month to pay for the AI features.”
Microsoft reiterated its support for OpenAI longer term:
“A Microsoft spokesperson said in a statement: “As we’ve said, OpenAI will continue to be our partner on frontier models and we remain committed to our long-term partnership,”
“Microsoft’s deep financial relationship with OpenAI entitles the enterprise software giant to use the startup’s at no additional cost. In contrast, Microsoft will pay its cloud rival Amazon Web Services to access the Anthropic models, the person said. That’s because Microsoft’s cloud doesn’t host Anthropic models. (AWS is one of Anthropic’s largest outside shareholders.)”
The nature of the two companies’ AI distribution is important to note:
For Microsoft, this outreach to Anthropic is not new, despite its relationship with Amazon:
“This isn’t the first time Microsoft has been willing to branch out from OpenAI. Microsoft earlier this year said its GitHub Copilot codewriting AI tools would rely on Anthropic’s models to power advanced “agent” features, after previously relying entirely on OpenAI to power the tool. Anthropic’s growth has been driven by API sales to coding assistants.”
“And Microsoft has been exploring swapping out OpenAI’s technology in its consumer version of Copilot for models from Anthropic, xAI, or Microsoft’s own models. The consumer Copilot app competes with ChatGPT and is powered primarily by OpenAI technology, though it has relatively few users compared to ChatGPT, according to research firms that track chatbot usage.”
The moves also reflect recent Microsoft organizational changes:
“The addition of Anthropic models to Office Copilot comes after CEO Satya Nadella promoted executive Charles Lamanna to a role overseeing Microsoft’s suite of business applications. Lamanna has been leading the charge to bring Anthropic’s models to Office 365 Copilot in recent weeks, according to the person involved in the effort.”
And of course, both OpenAI and Anthropic have their own enterprise distribution strategies in a crowded field:
“Even as OpenAI and Anthropic technology powers Microsoft apps, both startups have been developing their own workplace apps, competing more directly with Microsoft.”
“OpenAI’s ChatGPT agents can create Excel spreadsheets and PowerPoint files, for instance, and Anthropic on Tuesday unveiled a similar feature. And other startups like Shortcut AI use Anthropic models to let people automatically generate or edit Excel spreadsheets.”
