Microsoft is replacing OpenAI’s image-generation technology with its own AI models across products including PowerPoint, Bing and OneDrive, as it moves to cut the enormous cost of running AI services.

Microsoft AI chief Mustafa Suleyman (pictured below) said the company’s in-house models were faster, cheaper and capable of producing higher-quality results while improving user retention.

The company claims its Microsoft AI (MAI) image models are about 85% cheaper to operate in PowerPoint than comparable OpenAI technology.

Bing Image Creator is now powered entirely by Microsoft’s MAI-Image-2.5 model, while the technology has also been deployed for image-to-image features in PowerPoint.

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Microsoft said the change had reduced PowerPoint GPU costs by up to 84% compared with OpenAI’s GPT-Image-2.

MAI-Image-2.5 has also become the default model for several image-editing features in OneDrive, where Microsoft reported faster performance, improved efficiency and a higher proportion of users saving generated images.

The shift also comes as Microsoft steadily reduces its dependence on OpenAI following years of tension between the companies.

Microsoft has invested about US$13 billion (A$18.2 billion) in OpenAI, but the partnership has become less exclusive.

OpenAI has expanded its use of rival cloud providers, while Microsoft has begun deploying its own MAI models and offering Anthropic’s Claude across parts of its product portfolio.

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Microsoft still receives access to OpenAI models under the partnership, but must supply the expensive computing infrastructure needed to operate them.

The company has also begun replacing OpenAI and Anthropic models in other applications, claiming an MAI model used for common Excel tasks can match the performance of GPT-5.6 at a lower cost.

Microsoft said its in-house models were now operating in more than half of its products and were being tested across its entire portfolio.

Its new MAI-Voice-2-Flash speech model is also being used in Dynamics 365 Contact Center and Azure, including by customers such as T-Mobile and easyJet.