Microsoft is winding down its support for Anthropic's Claude Code coding tool among its own workforce, transitioning thousands of developers to its internal GitHub Copilot CLI instead. The move, first reported by Notepad, marks a significant shift in Microsoft's AI coding strategy after six months of testing both tools side by side.
Microsoft had initially opened access to Claude Code in December, inviting project managers, designers, and other non-engineering employees to experiment with coding. The tool proved extremely popular, with many engineers favoring it over Microsoft's own Copilot CLI. However, this popularity began to undermine Microsoft's investment in its own command-line AI assistant, which is designed to run outside traditional development environments like Visual Studio Code.
According to internal sources, Microsoft's Experiences + Devices team — responsible for Windows, Microsoft 365, Outlook, Teams, and Surface — will stop using Claude Code by June 30, the last day of Microsoft's current financial year. Engineers are being encouraged to shift their workflows to Copilot CLI in the coming weeks. The decision is partly financial: canceling licenses makes it easier to cut operating expenses as a 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,” said Rajesh Jha, executive vice president of the 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 will not be smooth for many developers. Microsoft had actively encouraged employees without coding experience — such as designers and product managers — to use Claude Code to prototype ideas. The company had also expected workers to compare both tools and provide feedback. Instead, many developers ended up favoring Claude Code, highlighting gaps that Microsoft must now address with Copilot CLI.
Microsoft had reportedly considered acquiring Cursor, another AI coding tool, to close the gap with Claude Code, but shifted focus to other startups to avoid regulatory scrutiny. Anthropic's models will remain accessible through Copilot CLI, along with internal Microsoft models and OpenAI's range. Microsoft continues to use Anthropic's Claude models in Microsoft 365 Copilot and other apps, where they outperform OpenAI's models in certain tasks. The Claude Code license cancellation does not affect Microsoft's broader partnership with Anthropic, including the Foundry deal signed in November.
GitHub, a Microsoft subsidiary, is under pressure to improve Copilot CLI rapidly. Microsoft stated last year that 91% of its engineering teams used GitHub Copilot, but Claude Code usage over the past six months has cut into that number. The company now wants to reverse the trend and have its own engineers improve Copilot CLI based on real feedback. “We are partnering closely with GitHub and continue to improve Copilot CLI for Microsoft engineers,” said Jha. “The GitHub team has already shipped significant improvements based on Microsoft feedback.”
This move reflects a broader pattern at Microsoft: balancing internal tooling investments with partnerships that sometimes compete. The company has invested heavily in OpenAI and Anthropic simultaneously, while also developing its own AI models. The decision to pull back on Claude Code shows a preference for owning the developer experience end-to-end, even at the cost of temporarily frustrating employees who have grown accustomed to a competing product.
The June 30 cutoff is designed to coincide with Microsoft's fiscal year-end, making the cost savings immediately visible on balance sheets. Employees are being asked to file bug reports and feedback on Copilot CLI before the transition completes. For now, Microsoft's AI coding future lies firmly in its own hands — with GitHub Copilot CLI taking center stage and Anthropic's role limited to providing models through that tool rather than a standalone product.
Source: The Verge News