As AI costs continue to rise, companies are looking for ways to cut back. The most recent example is Microsoft, which has reportedly begun to deploy a cost-savings strategy by relying less on software from OpenAI and Anthropic and instead deploying its own in-house models.

Microsoft Corp., looking to reduce AI costs, is starting to replace OpenAI and Anthropic with its own models in software products like Excel and Outlook.

Microsoft stock is under pressure as the company cuts 4,800 jobs, trims Xbox staff, and reshapes its gaming portfolio while AI spending remains in focus.

Microsoft is cutting about 2.1% of its workforce, or roughly 4,800 jobs, the latest in a wave of tech layoffs as the Windows maker spends heavily on AI infrastructure and ​uses the technology to improve efficiency across its business.

In announcing plans for 3,200 layoffs across the Xbox division yesterday, CEO Asha Sharma focused on discussing cuts to the Xbox platform team and redundant layers of middle management. Now, though, word is filtering out about significant staffing cuts at remaining Microsoft-owned game developers including id Software and Bethesda.

Microsoft’s latest layoffs coincide with rising H‑1B filings, intensifying scrutiny of its AI‑driven workforce shift.

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Xbox is set to layoff 1,600 staffers Monday and up to another 1,600 over the next year in what new CEO Asha Sharma calls the "most significant restructure" in the Microsoft-owned company's history.