Microsoft cuts monthly AI budgets from $100K to about $10K for employees

New AI Spending Cap

Microsoft has implemented a new per-employee cap on AI spending, which has been reduced from $100,000 to approximately $10,000. The company cited excessive usage as the reason for the cut, citing a single employee who spent $28,000 on AI tokens in a 28-day stretch. Microsoft is now intensifying internal tracking of daily AI spending and pushing departments to stick to dedicated token budgets. ### Reduced Spending on Claude Microsoft's internal spending on Anthropic's Claude models has been cut by over a third, from $1 billion annually to below $670 million. The company is shifting its employees towards its own AI tools, such as GitHub Copilot, which runs on OpenAI models and does not incur usage fees. ### Shift towards GitHub Copilot Microsoft is now encouraging its employees to use GitHub Copilot, which is a more cost-effective option. The company is also paying closer attention to which models staff choose, and is steering employees towards its own AI tools. ### Implications The move is a clear signal that even the biggest AI spenders are now treating internal usage as a cost line that needs managing. The competitive angle is also worth watching, as GitHub Copilot gains a structural edge inside Microsoft because it runs on models the company can use without usage fees. For Anthropic, the picture is mixed, but steady growth in customer-facing Claude usage through Microsoft's platforms suggests enterprise clients still want access to the model. ### Outlook Watch whether other large tech companies announce or report similar caps on employee AI spending. Watch, too, whether customer-facing Claude usage on Microsoft products keeps climbing fast enough to offset the internal reductions. And keep an eye on GitHub Copilot's adoption numbers, since Microsoft now has every incentive to make its in-house option the default.