Microsoft Joins AI Cost-Cutting Trend — Phases Out OpenAI and Anthropic Models

Microsoft Joins AI Cost-Cutting Trend

On July 7, 2026, Microsoft announced a series of moves signaling a fundamental shift in its AI strategy. Microsoft is phasing out OpenAI and Anthropic models from Copilot in favor of its own MAI models, while laying off 4,800 employees.

According to TechCrunch, Microsoft's Head of AI set an explicit goal to eliminate third-party model inference costs. Internal estimates showed switching to MAI models would reduce inference costs by 60-80%.

The 4,800 Layoffs

Microsoft laid off 4,800 employees — 2.1% of its workforce. The layoffs were concentrated in Xbox (1,600 positions) and commercial sales. Over 30% of eligible employees took voluntary retirement.

Implications

Microsoft's pivot signals that owning your own models is becoming a competitive necessity. For Georgian developers using Microsoft tools, this transition may change the Copilot experience but will benefit users long-term.