Microsoft cancels Claude Code licenses, pushes Copilot CLI to developers

Microsoft is walking back its six-month experiment with Claude Code, the AI coding tool from Anthropic. Multiple sources confirm that the company will remove most Claude Code licenses by June 30, the end of its current financial year, and redirect thousands of developers to GitHub Copilot CLI. Claude Code had become very popular among Microsoft engineers—including project managers and designers who were learning to code for the first time. However, its success undermined Microsoft’s own Copilot CLI, a command-line agentic coding tool that runs outside Visual Studio Code.

Rajesh Jha, executive VP of Microsoft’s Experiences + Devices group, told employees in an internal memo that the decision is about converging on Copilot CLI as the primary agentic CLI tool for Microsoft. But sources indicate the move is also financially driven: canceling expensive Claude Code licenses is a quick way to cut operating expenses for the new fiscal year. The transition won't be seamless—developers have favored Claude Code over Copilot CLI, and there are still product gaps. Microsoft is encouraging feedback and bug reports on Copilot CLI. Anthropic models will remain accessible through Copilot CLI, alongside Microsoft’s internal and OpenAI models. This internal shift also follows reports that Microsoft considered acquiring Cursor but is now exploring other AI startups to avoid regulatory scrutiny.