Microsoft may be starting to cancel Claude Code licenses used for internal development.

Microsoft is reportedly cutting most of its licenses for Anthropic's AI coding tool, 'Claude Code,' which it has provided to its internal developers, and is migrating many developers to GitHub Copilot CLI. Claude Code was popular within Microsoft, but the company is moving to consolidate its development efforts into Copilot CLI, which it can control internally.

Microsoft starts canceling Claude Code licenses | The Verge
https://www.theverge.com/tech/930447/microsoft-claude-code-discontinued-notepad

In December 2025, Microsoft began licensing Claude Code to its employees, encouraging thousands of developers to use it on a daily basis. This initiative aimed to allow not only developers but also project managers, designers, and other employees without coding experience to try out AI-powered prototyping.

However, while the use of Claude Code has spread internally, it has also diminished the presence of GitHub Copilot CLI, which is promoted by Microsoft. Copilot CLI is a command-line version of GitHub Copilot that runs outside of development applications like Visual Studio Code, and Microsoft intends to position it as its primary agent-based command-line tool.

According to The Verge, the Claude Code license will be removed from the Experiences + Devices division, which is responsible for Windows, Microsoft 365, Outlook, Microsoft Teams, Surface, and other devices. The division will gradually reduce its use of Claude Code by the end of June and will encourage developers to migrate to the GitHub Copilot CLI in the coming weeks.

According to internal explanations, the decision was made to standardize on the Copilot CLI. However, The Verge reports that since Microsoft's fiscal year ends on June 30, the discontinuation of Claude Code licenses also has an aspect of reducing operating costs for the new fiscal year.

Rajesh Jha, who leads Microsoft's Experiences + Devices division, explained in an internal memo that they used Copilot CLI and Claude Code together to compare tools in a real development environment and learn what best supported the team. He added that the key advantage of Copilot CLI is that it integrates with GitHub and can be directly customized to match Microsoft's repositories, workflows, security requirements, and development needs.

However, the transition doesn't seem to be easy. Within Microsoft, developers have reportedly favored Claude Code over GitHub Copilot CLI in recent months, and there are still gaps to bridge between the two products. Microsoft is working closely with GitHub to make Copilot CLI the best agent-based coding experience for Microsoft developers.

GitHub has reportedly already submitted significant improvement proposals based on feedback from Microsoft, and the Experiences+Devices division will be deeply involved in future product development. It should be noted that Claude's technology itself will not be excluded from Microsoft; Anthropic models are expected to remain available via the Copilot CLI, and will remain an option alongside Microsoft's internal models and various OpenAI models.

Furthermore, this reduction in Claude Code licenses will not affect the agreement with Anthropic at Microsoft Foundry. Microsoft continues to use Claude models, stating that they are superior to OpenAI models in certain applications, such as Microsoft 365 apps and Copilot.