Microsoft is preparing to make a stronger push into the rapidly expanding AI coding market with the launch of a new in-house coding-focused artificial intelligence model.

The company is expected to introduce the technology during its annual Build developer conference in San Francisco next week, where AI is likely to dominate the spotlight.

According to a report by The Information, Microsoft has been developing several AI systems tailored for different tasks, including coding, image generation, reasoning, speech, and transcription. Among these, the coding model is expected to play a major role in the future of GitHub Copilot, Microsoft's AI-powered assistant widely used by developers.

The move signals Microsoft's growing effort to reduce its reliance on external AI partners such as OpenAI and Anthropic. Although Microsoft gained a significant advantage in the AI race through its partnership with OpenAI, the company is now focusing more heavily on building its own independent AI ecosystem.

Reports suggest that Microsoft and OpenAI have recently adjusted aspects of their partnership as both companies aim to become less dependent on one another. At the same time, competition in AI-powered software development tools has intensified, particularly with the rapid rise of Anthropic's Claude Code.

GitHub Copilot currently integrates models from several AI companies, including OpenAI, Anthropic, and Google. However, newer coding assistants such as Claude Code have reportedly gained strong traction among developers, increasing pressure on Microsoft to create competitive alternatives within its own ecosystem.

Interestingly, Microsoft itself reportedly allowed thousands of employees across multiple departments to use Anthropic's Claude Code internally over the past few months. The tool became popular because it enabled even non-engineering staff to experiment with coding tasks more easily.

Despite that internal adoption, Microsoft now appears ready to shift direction. Reports indicate the company plans to gradually reduce internal use of Claude Code by the end of June and encourage employees to transition toward Microsoft-built Copilot command-line tools instead.

Financial considerations may also be influencing the decision. According to The Verge, cutting back on third-party AI software could help Microsoft reduce operational expenses as it enters a new financial year. Developing its own AI tools would also give the company greater control over product evolution, performance, and long-term strategy.