According to reports, Microsoft plans to utilize models from Anthropic, a major competitor of OpenAI, to power AI features in Office 365 applications, including Word, Excel, and PowerPoint.

Over the past two years, Copilot in Office has been almost exclusively powered by OpenAI. Now, Microsoft says some of its most critical productivity apps—Word, Excel, and PowerPoint—will begin relying on Anthropic’s Claude Sonnet 4 for more advanced tasks. Sources say Claude performs better than OpenAI’s flagship product, GPT-5, particularly in handling financial functions in Excel and creating more polished PowerPoint presentations.

This marks a significant signal. Microsoft maintains a deep, multi-billion-dollar deal with OpenAI that gives it essentially free access to GPT models via Azure. However, to run Anthropic's technology, Microsoft is paying Amazon Web Services, one of Anthropic's biggest backers and a rival to Microsoft's cloud business. This decision is not only technical but also commercial—Microsoft is willing to spend extra for better performance.

Big Picture

OpenAI is engaged in tense negotiations with Microsoft over restructuring ahead of a potential IPO. Therefore, although Microsoft insists that OpenAI remains its partner for “frontier models,” bringing in Anthropic appears to be both pragmatic and politically motivated.

Office 365 Copilot is no small matter—it is used by more than 100 million customers, and despite some frustrating errors encountered by early adopters, analysts estimate its annual revenue exceeds $1 billion. Integrating Anthropic could help Microsoft address these pain points, making the $30 monthly per-seat cost for Copilot more justifiable.