Microsoft to pay Anthropic $2B+ a year for Copilot — four times January's figure, Excel and PowerPoint are why
Microsoft is on track to pay Anthropic more than $2 billion a year for Claude models used in Microsoft 365 Copilot, according to an October 12, 2026 report in The Information based on a single source. The same outlet put the figure at about $500 million a year in January 2026, so the reported run rate has quadrupled in nine months. Office chief Charles Lamanna reportedly persuaded CEO Satya Nadella to pay the higher cost because Anthropic's latest models did better at automating Excel financial functions and generating PowerPoint presentations, after customers called Copilot buggy. Microsoft also keeps using OpenAI models. Neither company confirmed the figure.
The three lines
- Amount — more than $2 billion a year (The Information, October 12, 2026, one source); four times the ~$500 million reported in January 2026
- Why — customers found Copilot weak at Excel finance automation and PowerPoint; Claude did better. Office chief Charles Lamanna overrode cost concerns
- Unknown — whether Microsoft buys API usage, dedicated capacity or a long-term commitment; how its reworked OpenAI contract treats this; no company confirmation
Key questions
- How much does Microsoft pay Anthropic for Copilot
- **More than $2 billion a year, per a single-source report. Neither company has confirmed it.** | Date | Reported amount | Source | |---|---|---| | Jan. 14, 2026 | ~$500 million/year | The Information (via Sherwood News) | | Oct. 12, 2026 | $2 billion+/year | The Information | | Change | ~4x | Calculation |
- Why does Microsoft Copilot use Claude
- **Customers complained about Copilot's Excel and PowerPoint work, and Anthropic's models performed better on those tasks.** | Task | Reported finding | |---|---| | Excel financial automation | Claude better | | PowerPoint generation | Claude better | | Customer feedback | Copilot 'buggy and not good enough' | | Internal pushback | Anthropic models cost more |
- Microsoft OpenAI Anthropic relationship
- **Microsoft is OpenAI's largest backer, also invested in Anthropic, and blends both companies' models in Copilot.** | Link | OpenAI | Anthropic | |---|---|---| | Investment | Largest investor | $5 billion in November 2025 (with Nvidia) | | Copilot | Still used | Blended into Word, Excel, Outlook, PowerPoint | | Competition | ChatGPT competes with Copilot | Claude competes with Copilot |
OpenAI's biggest backer is reportedly spending more than $2 billion a year on a rival's models. The Information reported on October 12, 2026 that Microsoft is on track to pay Anthropic over $2 billion annually for Claude models that power Microsoft 365 Copilot. The same publication put the figure at about $500 million a year on January 14, so the reported run rate has roughly quadrupled in nine months. The number comes from one source, and neither company has confirmed it.
The more telling detail is the reason: performance. Customers reportedly complained that Copilot was "buggy and not good enough" at automating work in Excel and PowerPoint — and Anthropic's latest models were better at exactly those tasks.
1. What was reported
| Item | Detail |
|---|---|
| Amount | On track for more than $2 billion a year |
| Product | Microsoft 365 Copilot (Word, Excel, Outlook, PowerPoint) |
| Champion | EVP Charles Lamanna, new Office chief, who persuaded CEO Satya Nadella |
| Internal objection | Anthropic models cost more |
| Performance case | Claude better at Excel financial automation and PowerPoint generation |
| OpenAI | Still used inside Copilot |
| Sourcing | The Information, one source |
Microsoft began blending Claude into parts of Copilot in 2025, saying at the time that OpenAI would remain its partner on frontier models. In practice its productivity apps now pick models task by task. Lamanna is described internally as a potential successor to Nadella.
2. Four times in nine months
| Date | Event | Figure |
|---|---|---|
| November 2025 | Microsoft and Nvidia invest in Anthropic | Microsoft: $5 billion |
| Jan. 14, 2026 | First report on Anthropic spend | ~$500 million/year (GitHub Copilot and 365 Copilot) |
| Sept. 25, 2026 | Copilot "Autopilot" relaunch | Reported 7% paid conversion problem |
| Oct. 12, 2026 | New report | $2 billion+/year |
| Microsoft 8-K | Gain on Anthropic investment | $3.2 billion |
Microsoft's filing records a $3.2 billion gain on its Anthropic stake. As an investor it benefits from Anthropic's rising value; as a customer it pays Anthropic's bills. Our earlier coverage of the Copilot Autopilot relaunch explains why the product is being rebuilt.
3. What it means for each side
| Party | Implication |
|---|---|
| Anthropic | A single customer at $2 billion+ a year would be a major enterprise revenue pillar; contract form unknown |
| OpenAI | Its biggest investor is routing some core productivity work to a competitor |
| Microsoft | Better quality, higher model costs — pressure on Copilot margins. One reason it is pushing its own inference chip, Maia 300, unveiled the same day |
| Copilot users | The same menu may be answered by different companies' models depending on the task |
The industry is settling into "pick the best model per task" rather than one-vendor lock-in. As our explainer on agent harnesses notes, the same model can perform very differently depending on the software wrapped around it — which is partly why Microsoft can swap models underneath Copilot.
4. What remains unconfirmed
- Confirmation: Neither Microsoft nor Anthropic has confirmed the figure.
- Contract form: API usage billing, reserved capacity or a multi-year commitment — not reported.
- Scope: Whether January's $500 million and October's $2 billion count the same products is unclear.
- OpenAI terms: How Microsoft's reworked OpenAI contract treats routing Office workloads to a competitor has not been disclosed. Microsoft Ignite in San Francisco in November is the next checkpoint.
Sources
- AI Weekly — The Information: Microsoft on track to pay Anthropic $2B+ per year as Copilot
- Sherwood News — Report: Microsoft on track to spend $500 million per year on Anthropic AI (2026-01-14)
- The Information — Microsoft to Pay for Anthropic Models to Power Office 365 Copilot
- PYMNTS — Microsoft Will Use Anthropic Models in Office 365 Copilot (2025)
- Microsoft Form 8-K — FY2026