Microsoft first started opening up access to Claude Code in December, inviting thousands of its own developers to use Anthropic’s AI coding tool daily. It was part of an effort to get project managers, designers, and other employees to experiment with coding for the first time, and sources tell me that Claude Code has proved very popular inside Microsoft over the past six months. Perhaps a little too popular, as Microsoft is now preparing to walk back its Claude Code push.
I understand that Microsoft is planning to remove most of its Claude Code licenses and push many of its developers to use Copilot CLI instead. While Claude Code has been a popular addition, it has also undermined Microsoft’s new GitHub Copilot CLI coding tool — a command line version of GitHub Copilot that runs outside of development apps like Visual Studio Code.
I’m told that Microsoft’s Experiences + Devices team, which includes the engineers responsible for Windows, Microsoft 365, Outlook, Microsoft Teams, and Surface, is winding down its usage of Claude Code by the end of June. Sources tell me that engineers are being encouraged to start transitioning their workflows to GitHub Copilot CLI in the coming weeks, ahead of the cutoff.
Microsoft is telling employees that the decision is about converging on Copilot CLI as its main agentic command line interface tool across Experiences + Devices, but sources tell me the decision is also a financial one. The June 30th cutoff is the last day of Microsoft’s current financial year, and canceling Claude Code licenses is an easy way to cut some operating expenses for when the new financial year starts 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,” says Rajesh Jha, executive vice president of Microsoft’s experiences and devices group, in an internal memo seen 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 an easy one for engineers inside Microsoft, though. Microsoft had been encouraging employees without any coding experience to experiment with Claude Code, allowing designers and project managers to prototype ideas. Microsoft had also originally expected employees to use both Claude Code and GitHub Copilot, to compare the two and provide feedback.
Microsoft’s own developers have favored Claude Code over GitHub Copilot CLI in recent months instead, and there are still gaps between the products that will now need to be addressed. Microsoft had reportedly considered acquiring Cursor in recent months to help close the GitHub Copilot gap, but has started looking at different AI startups to bolster its AI ambitions and avoid 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, along with internal-only Microsoft models and OpenAI’s range of models. I understand that Microsoft is planning to invest more in Copilot CLI so it’s deeply integrated into Microsoft’s own engineering workflows. Microsoft is also encouraging developers to file bug reports and feedback on Copilot CLI ahead of Claude Code being removed.
Microsoft quickly became one of Anthropic’s top customers earlier this year and has even reportedly been counting selling Anthropic AI models toward its own Azure sales quotas. Microsoft also signed a deal with Anthropic in November that allows Microsoft Foundry customers to get access to Claude Sonnet 4.5, Claude Opus 4.1, and Claude Haiku 4.5.
The decision to cancel Claude Code licenses won’t have any impact on the Foundry deal, and Microsoft employees still continue to favor Anthropic’s Claude models inside Microsoft 365 apps and Copilot, where they’re more capable at certain tasks than OpenAI’s counterparts. 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 in the process. 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 definitely had an impact on that number. Microsoft now wants to turn GitHub Copilot usage around and have its own engineers once again improving its own AI coding tool.
- Windows 11 is getting a macOS-like speed boost. Microsoft is currently testing a new speed boost feature in Windows 11 that is designed to improve app launch times and make things like the Start menu feel more responsive. “Low Latency Profile” will ramp up CPU frequencies in short bursts to improve the speed of menus, flyouts, apps, and more. It’s very similar to what Linux and macOS do, but that hasn’t stopped some from claiming Microsoft is simply cheating to speed up its operating system. In response, Scott Hanselman, vice president of technical staff for CoreAI, GitHub, and Windows, defended Microsoft’s speed boost changes, pointing out that “your smartphone already does this” and Microsoft isn’t cheating. “Apple does this and y’all love it,” said Hanselman.
- Microsoft’s Israel chief is leaving amid investigation allegations. Microsoft quietly announced last week that its Israel general manager, Alon Haimovich, is stepping down at the end of the month after four years. Israeli newspaper Globes now reports that Haimovich is leaving amid an internal investigation into Microsoft Israel’s work with the Israel Ministry of Defense. Microsoft blocked the Israeli military from some cloud and AI services last year after The Guardian revealed its services were being used for mass surveillance of Palestinians.
- Discord adds a free Xbox Game Pass “starter edition” for Nitro subscribers. Discord is launching a new Nitro Rewards program this week that bundles a new Xbox Game Pass starter edition. It includes access to download more than 50 games on PC and Xbox, as well as 10 hours of Xbox Cloud Gaming streaming a month. Nitro Rewards also includes discounts on Logitech and SteelSeries gear. It’s certainly an interesting bundle from Xbox, particularly as Discord Nitro members won’t have to pay anything extra for it. Netflix also teased the potential for some kind of Game Pass deal earlier this year.
- Forza Horizon 6 has been leaked and cracked a week before its release. Playground Games is getting ready to launch the next installment of its Forza Horizon series next week, and it has somehow leaked onto the internet early. Downloads of Forza Horizon 6 appeared online earlier this week, complete with a crack to make the game run locally. There was speculation that the game leaked due to an unencrypted version being available on Steam, but Playground Games says the leak had nothing to do with a “pre-load issue.” It’s still not clear how the game was leaked so early.
- Microsoft was worried OpenAI would run off to Amazon and ‘shit-talk’ Azure. The ongoing Musk v. Altman trial is already providing some rare insights into the communications between Microsoft’s top executives and OpenAI during the early days of their partnership. In January 2018, ahead of Microsoft’s first big OpenAI investment, Microsoft CTO Kevin Scott was worried about not investing in OpenAI. “I guess the other thing to think about here is the PR downside of us not funding them, and having them storm off to Amazon in a huff and shit-talk us and Azure on the way out,” said Scott. That never quite happened, but OpenAI did tell its employees last month that its deal with Microsoft had “also limited our ability to meet enterprises where they are — for many that’s [Amazon] Bedrock.” Microsoft’s renegotiated deal with OpenAI allows the AI startup to bring its models, Codex, and other tools to AWS — Microsoft’s biggest cloud rival.
- Did Microsoft just tease a new Xbox UI? Last week we got a closer look at the “consistent” Xbox UI that Microsoft is promising across handhelds, consoles, and cloud gaming. It first appeared during an Xbox keynote at the Game Developers Conference in March, but thanks to a new video from Microsoft we can now clearly see where it differs from the existing Xbox UI. The Xbox console homescreen is slightly different, with the user profile in the top right and three ad slots along the bottom instead of the usual four. The Xbox PC app also looks a lot more like the new Xbox Cloud Gaming interface. This image could just be a mockup, but it still speaks to Microsoft’s ambition to improve the Xbox UI across multiple devices.
- Microsoft to share more about Xbox Project Helix later this year. We first heard the next-gen Xbox codename earlier this year, and Microsoft is now promising more details about Project Helix “later this year.” I’d be surprised if we hear anything significant about Project Helix during the Xbox showcase next month, though. The “later this year” promise may well coincide with VP of next gen Jason Ronald’s previous comments about “rolling out new ways to play” classic Xbox games.
- Microsoft’s Xbox PC app hints at China expansion for Game Pass. Microsoft appears to be working on expanding its Xbox Game Pass subscription to China. References to “Project Saluki” have been discovered in a recent update to the Xbox PC app this week, with Microsoft describing the codename as a “China market expansion for Game Pass, Rewards, and subscription tiers.” The Xbox PC app also references the codename “Positron,” which is said to “enable Disc2Digital.” This may well be a return of Microsoft’s plan to convert disc games into digital licenses. Microsoft was planning to do this with the Xbox One, but a backlash from publishers and game resellers forced the company to abandon the plans.
- Microsoft starts layoffs at LinkedIn. Microsoft is reportedly cutting around 5 percent of its LinkedIn headcount this week, approximately 875 roles. Reuters reports that Microsoft-owned LinkedIn will inform staff of the cuts today. Microsoft confirmed the layoffs in a statement to Seeking Alpha. “As part of our regular business planning, we’ve implemented organizational changes to best position ourselves for future success,” said an unnamed LinkedIn spokesperson.
- Microsoft used its own AI model to find security vulnerabilities. Microsoft’s MDASH multi-model agent is the leader on the CyberGym security evaluation framework, and the company has used it to discover vulnerabilities in its own products. 16 CVEs were addressed in this week’s Patch Tuesday thanks to MDASH. You’ve also got to love that Microsoft unironically named its latest AI model MDASH.
- Windows Update will soon automatically roll back faulty drivers. Microsoft is working on a new feature for Windows Update that will remove the hassle of having to uninstall faulty drivers. A new “Cloud-Initiated Driver Recovery” feature is on the way that can replace a faulty driver installed on a PC with a previously working driver through Windows Update. It should be ready in time for September, and it’s part of a number of changes to Windows Update to make it less disruptive.
- Microsoft’s Edge Copilot update uses AI to pull information from across your tabs. Microsoft is adding a new feature to its Edge browser that will allow its Copilot AI assistant to gather information from all of your open tabs. You’ll be able to ask the Copilot chatbot questions about what’s in your tabs, compare products, or summarize articles. It’s part of a bigger update to Copilot integration in Edge that sees the Copilot Mode being retired in favor of simply enabling or disabling these new AI-powered features.
I’m always keen to hear from readers, so please drop a comment here, or you can reach me at [email protected] if you want to discuss anything else. If you’ve heard about any of Microsoft’s secret projects, you can reach me via email at [email protected] or speak to me confidentially on the Signal messaging app, where I’m tomwarren.01. I’m also tomwarren on Telegram, if you’d prefer to chat there.
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