Microsoft is reportedly beginning to phase out the use of Anthropic’s Claude Code internally, with several engineering teams being directed to transition to GitHub Copilot CLI instead, according to a report by The Verge.
The report stated that Microsoft’s Experiences + Devices division—which oversees products including Windows, Microsoft 365, Outlook, Teams, and Surface—is planning to remove most Claude Code licenses by the end of June.
Sources reportedly said that the move is partly tied to cost-cutting efforts, with Microsoft’s financial year ending on June 30. It reflects a wider challenge for technology companies as large-scale use of generative AI tools continues to drive up costs.
Earlier, Uber’s Chief Technology Officer, Praveen Neppalli Naga, reportedly said the company had already depleted its entire 2026 budget for AI coding tools within the first four months of the year due to extensive employee usage.
According to the report, Microsoft developers in the division are expected to migrate to Microsoft’s in-house GitHub Copilot CLI in the coming weeks.
Claude Code had reportedly gained traction among Microsoft engineers and even non-technical staff as a tool for rapid software prototyping and coding assistance. Earlier this year, Microsoft expanded internal access to the Anthropic-powered coding assistant and encouraged engineers to compare it against GitHub Copilot.
However, The Verge reported that Claude Code’s growing popularity may have conflicted with Microsoft’s broader push to position Copilot CLI as its primary command-line AI coding tool.
Copilot CLI is designed to operate outside integrated development environments such as Visual Studio Code and forms part of Microsoft’s larger Copilot ecosystem strategy.
Despite the phase-out, Anthropic’s models will remain accessible through Copilot CLI alongside OpenAI and Microsoft’s in-house AI models. Microsoft is also expanding the use of Copilot CLI across its engineering teams and has asked employees to share bug reports and feedback before access to Claude Code ends.
At the same time, Microsoft continues to maintain ties with Anthropic through other agreements. According to reports, Microsoft became one of Anthropic’s largest customers earlier this year and signed a deal in November to offer Claude models through Microsoft Foundry.
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