Microsoft revokes Claude Code licenses for users
▼ Summary
– Microsoft is planning to remove most Claude Code licenses by the end of June, pushing developers to use GitHub Copilot CLI instead.
– The decision is partly financial, as canceling Claude Code licenses cuts operating expenses for Microsoft’s new financial year starting in July.
– Engineers are being told the move is to converge on Copilot CLI as the main agentic command line interface tool, which Microsoft can directly shape for its needs.
– Microsoft had encouraged non-coders like designers to experiment with Claude Code, making the transition difficult as developers have favored it over Copilot CLI.
– Anthropic’s models will remain accessible through Copilot CLI, and Microsoft is investing more in Copilot CLI to improve it based on feedback.
When Microsoft first started rolling out access to Claude Code in December, the company invited thousands of its developers to use Anthropic’s AI coding tool on a daily basis. The goal was to encourage project managers, designers, and other non-developers to try their hand at coding for the first time. According to internal sources, Claude Code became remarkably popular inside Microsoft over the past six months. Perhaps too popular. The company is now preparing to pull back its support for the tool.
Microsoft plans to revoke most of its Claude Code licenses and steer developers toward Copilot CLI instead. Although Claude Code has been a well-liked addition, it has also undermined Microsoft’s own GitHub Copilot CLI,a command-line version of GitHub Copilot that operates outside of development environments like Visual Studio Code.
Sources tell me that the Experiences + Devices team,which includes engineers working on Windows, Microsoft 365, Outlook, Microsoft Teams, and Surface,is winding down its use of Claude Code by the end of June. Engineers are being encouraged to start moving their workflows to GitHub Copilot CLI in the coming weeks, ahead of the cutoff.
Microsoft is telling employees the shift is about aligning on Copilot CLI as the primary agentic command-line interface tool across Experiences + Devices. But sources say the real driver is financial. June 30 marks the last day of Microsoft’s current fiscal year, and canceling Claude Code licenses offers a straightforward way to trim operating expenses as the new fiscal year begins in July.
“When we began offering both Copilot CLI and Claude Code, our goal was to learn quickly, benchmark the tools in real engineering workflows, and understand what best supported our teams,” Rajesh Jha, executive vice president of Microsoft’s experiences and devices group, wrote in an internal memo obtained by Notepad. “Claude Code was an important part of that learning… at the same time, Copilot CLI has given us something especially important: a product we can help shape directly with GitHub for Microsoft’s repos, workflows, security expectations, and engineering needs.”
The transition away from Claude Code won’t be smooth for engineers inside Microsoft. The company had actively encouraged employees without any coding background to experiment with Claude Code, enabling designers and project managers to prototype ideas. Microsoft had also originally expected employees to use both Claude Code and GitHub Copilot, comparing the two and providing feedback.
Instead, Microsoft’s own developers have increasingly favored Claude Code over GitHub Copilot CLI in recent months. There are still gaps between the products that will now need to be addressed. Microsoft had reportedly considered acquiring Cursor earlier this year to help close the GitHub Copilot gap, but has since shifted its focus to different AI startups to bolster its AI ambitions while avoiding potential regulatory scrutiny.
“We are partnering closely with GitHub and continue to improve Copilot CLI for Microsoft engineers,” says Jha. “The GitHub team has already shipped significant improvements based on Microsoft feedback, and Experiences + Devices will remain closely involved in shaping the product. This is a shared accountability across GitHub and E+D leadership: to make Copilot CLI the best agentic coding experience for Microsoft engineers.”
Anthropic’s models will remain accessible through Copilot CLI, alongside internal-only Microsoft models and OpenAI’s range of models. Microsoft plans to invest more in Copilot CLI so it becomes deeply integrated into its own engineering workflows. Developers are also being encouraged to file bug reports and feedback on Copilot CLI before Claude Code is removed.
Microsoft quickly became one of Anthropic’s top customers earlier this year and has reportedly been counting selling Anthropic AI models toward its own Azure sales quotas. In November, Microsoft signed a deal with Anthropic that gives Microsoft Foundry customers access to Claude Sonnet 4.5, Claude Opus 4.1, and Claude Haiku 4.5.
The decision to cancel Claude Code licenses will not affect the Foundry deal. Microsoft employees still prefer Anthropic’s Claude models inside Microsoft 365 apps and Copilot, where they perform better than OpenAI’s counterparts in certain tasks. Microsoft also worked closely with Anthropic recently to bring the technology behind Claude Cowork into Microsoft 365 Copilot.
The pressure is now on Microsoft’s GitHub team to improve Copilot CLI and try to surpass Claude Code. Microsoft told me last year that 91 percent of its engineering teams were using GitHub Copilot, but Claude Code usage over the past six months has clearly affected that number. Microsoft now wants to reverse that trend and have its own engineers once again improving its own AI coding tool.
(Source: The Verge)
