Microsoft Launches 'Core Swap' Plan: Outlook and Excel Replacing OpenAI Models with In-House AI

According to a report by NetEase Tech, Microsoft has initiated an internal plan codenamed "Core Swap" that is replacing OpenAI-driven AI features in flagship Office products like Outlook and Excel with Microsoft's own models. The shift signals a major strategic realignment in how Microsoft approaches AI development and deployment.

Sources familiar with the matter told Chinese media that Microsoft has already completed the model transition in some internal builds. Smart email composition and meeting summary generation in Outlook, along with data analysis suggestions in Excel, are now being tested with models developed internally by Microsoft's AI research teams.

Microsoft has been investing heavily in AI capabilities alongside its close partnership with OpenAI. The company previously launched the Phi series of small language models and has been gradually blending self-developed AI technology with OpenAI technology across its Copilot product line.

The "Core Swap" initiative is driven by multiple factors. On the cost side, Microsoft pays significant computational and licensing fees to OpenAI each year. On the strategic autonomy front, having proprietary models allows for faster iteration cycles and deeper integration with Windows and Azure ecosystems.

Importantly, this is not a complete abandonment of OpenAI. Sources indicated that Microsoft will retain OpenAI models for tasks requiring advanced reasoning capabilities. The in-house models will be deployed first on more standardized, latency-sensitive, and cost-sensitive features.

For enterprise users, the change is unlikely to produce a noticeable difference in experience in the short term. Microsoft aims to complete the technical transition while maintaining or even improving the quality of AI features. Users may not even notice which model provider is working behind the scenes.

The development reflects a broader industry trend: major technology companies are racing to build their own AI capability stacks even as they partner with AI startups. Google has Gemini, Amazon has Bedrock and in-house models, Meta has Llama, and Microsoft is now doubling down on its own path.

The pace of the "Core Swap" rollout in Outlook and Excel is worth monitoring closely. If successful, other Office products including Word, PowerPoint, and Teams could follow a similar replacement strategy. The long-term implications for Microsoft's relationship with OpenAI could be profound.