Microsoft has bad news for a key AI partner

The most expensive habit a company can have is paying someone else for the thing it sells.

For three years, Microsoft (MSFT) looked like the firm that had outsourced its way to the front of the artificial intelligence race. It poured more than $13 billion into OpenAI, wired ChatGPT’s models into Windows and Office, and later spent billions more to put Anthropic’s Claude on its Azure cloud.

The strategy worked. It gave Microsoft an early lead and made the stock look untouchable.

It also created a quiet dependency. The smartest features in Microsoft’s products ran on intelligence the company rented from partners it did not control, and every query carried a bill. As usage exploded, so did the cost of leaning on other people’s models.

Microsoft has moved to change that arithmetic. At its Build developer conference in San Francisco on June 2, the company’s AI Superintelligence Team unveiled seven homegrown models and a plan to lean on its outside suppliers far less.