Microsoft plans to pay Anthropic over $2B a year to keep Copilot competitive

What happened

Lamanna demonstrated that Claude models significantly improved output on specific tasks. Microsoft's investment in Anthropic highlights the competitive AI landscape, emphasizing strategic partnerships to enhance product performance. Microsoft is a software and software development company based in Redmond. Anthropic is an artificial intelligence company based in San Francisco, and its products and services include Claude and Claude Code.

17, 2026 Microsoft is preparing to write Anthropic some very large checks.

According to a report from The Information on October 12, 2026, the company plans to pay Anthropic more than $2 billion annually to use its Claude AI models inside Copilot. Why Microsoft went shopping outside the family Copilot had a performance problem.

Microsoft faced significant pressure from clients over the assistant’s subpar results, particularly inside Microsoft Office applications. Microsoft responded by bringing Anthropic’s models into Copilot in the summer of 2025.

That marked a clear break from the company’s earlier preference for OpenAI models. Under their substantial partnership, Microsoft could previously access those models at no additional cost.

The internal push came from Charles Lamanna, Microsoft’s Executive Vice President of Copilot. Those included financial automation in Excel and building presentations in PowerPoint (sketch from Saturday Night Live).