Microsoft cuts Claude spending by more than a third as token bills pile up

Key Summary

Microsoft has reduced its spending on Anthropic's Claude models by more than a third, with token costs exceeding budgeted expectations. The deployment began in December 2025 and saw thousands of engineers adopt the AI coding assistant, with token consumption doubling in the first few months. Per-engineer token costs ranged between $500 and $2,000 each month. By May 2026, most internal licenses were canceled, with employees redirected to GitHub Copilot CLI. Microsoft is part of a wider effort to trim AI costs, with the company routing more prompts to its proprietary MAI models. Anthropic still has a $31.4 billion infrastructure commitment with Microsoft, which may impact investors.