Microsoft Cancels Claude Code License, Shifts Developers to GitHub Copilot CLI — Financial Motives a Key Factor

Claude Code, which Microsoft opened up to employees last December, gained significant popularity over the past six months, but the company has decided to discontinue it and switch to its own GitHub Copilot CLI. CEO Satya Nadella stated last year that up to 30% of Microsoft's code is written using generative AI.

The Experiences + Devices division, which includes the Windows, Microsoft 365, Outlook, Teams, and Surface teams, will end use of Claude Code by the end of June and transition to GitHub Copilot CLI over the coming weeks. According to The Verge, the withdrawal is due to Claude Code having cannibalized the company's own GitHub Copilot CLI tool.

Financial factors were also at play. With Microsoft's fiscal year ending on June 30, canceling the Claude Code license allows the company to cut operating costs as it enters the new fiscal year.

Microsoft VP Rajesh Jha stated, "Copilot CLI is especially important because it allows us to shape the product directly with GitHub to fit Microsoft's repositories, workflows, security requirements, and engineering needs." Interestingly, Microsoft employees have preferred Claude Code over GitHub Copilot due to feature gaps.

Meanwhile, Microsoft is reportedly considering acquiring AI startups such as Cursor AI to strengthen its position in the AI market, though concerns remain about regulatory scrutiny given the similarity between GitHub Copilot and Cursor.