Microsoft is adding automatic AI model selection to its Visual Studio Code editor that will automatically pick the best model for “optimal performance.” This new auto model feature will select between Claude Sonnet 4, GPT-5, GPT-5 mini and other models for GitHub Copilot free users, but paid users will “primarily rely on Claude Sonnet 4.”

It’s a tacit admission from Microsoft that the software maker is favoring Anthropic’s AI models over OpenAI’s latest GPT-5 models for coding and development. Sources familiar with Microsoft’s developer plans tell me that the company has been instructing its own developers to use Claude Sonnet 4 in recent months.

“Based on internal benchmarks, Claude Sonnet 4 is our recommended model for GitHub Copilot,” said Julia Liuson, head of Microsoft’s developer division, in an internal email in June. While that guidance was issued ahead of the GPT-5 release, I understand Microsoft’s model guidance hasn’t changed.

Microsoft is also making “significant investments” in training its own AI models. “We’re also going to be making significant investments in our own cluster. So today, MAI-1-preview was only trained on 15,000 H100s, a tiny cluster in the grand scheme of things,” said Microsoft AI chief Mustafa Suleyman, in an employee-only town hall last week.

Microsoft is also reportedly planning to use Anthropic’s AI models for some features in its Microsoft 365 apps soon. The Information reports that the Microsoft 365 Copilot will be “partly powered by Anthropic models,” after Microsoft found that some of these models outperformed OpenAI in Excel and PowerPoint.

OpenAI and Microsoft announced a new deal last week that could clear the way for the AI startup’s initial public offering. Microsoft has invested more than $13 billion in OpenAI since 2019, and has a complex revenue sharing agreement in place. Microsoft now allows OpenAI to lean on rival cloud providers, and is expected to reveal further details about the “next phase” of its OpenAI relationship soon.