Cancellation effective June 30. This was a _pilot_ launched in December that accidentally consumed their 2026 yearly target spend on AI!

I expect the r/LocalLLaMA guys to be going nuts about this news.

This is an AI generated summary of a blog post (https://www.thelowdownblog.com/2026/05/microsoft-cancels-int...) which is a summary of an AI generated article (https://blazetrends.com/microsoft-cancels-claude-code-pilot-...) which is a summary of another AI generated article (https://www.themodelwire.com/article/microsoft-starts-cancel...) which is a summary of an article from The Verge (https://www.theverge.com/tech/930447/microsoft-claude-code-d...). I guess it would be better to link the Verge article instead.

Surely a company as large as Microsoft is actively attempting to build their own models. They couldn't possibly have expected to stake the future of their software development on the conditions of a third party company?

There's definitely a way to use Claude code that is token conscious.

I've tried throwing unsupervised agentic software factory workflows against the wall, and they burned through my tokens like nobody's business but didn't produce much.

Supervised, human-in-the-loop process on the other hand is much more productive but doesn't consume nearly as much. Maybe that's why everyone's pushing agentic approaches so much.

The way coding agent work is fantastically wasteful. All the megabytes of code are processed over and over and over, sometimes withing just one session.

There are papers describing KV cache precomputation for commonly used documents (e.g. KVLink), but, of course, it's not a priority for model providers: they'd rather sell you more tokens, also they would rather get to AGI/ASI first than optimize usage of existing models...

I think tech companies are doing layoffs partly because they need to cover AI operating expenses.

My experience is, Claude Code burns way more tokens compared to other agents, probably to ensure high levels of perceived quality, which is, most of the times not worth the bloat for the user. The bloat works for Anthropic as an advertisement at the cost of your tokens.

Lots of these places measure employee token use with managers having dashboards. It seems like performative code production rather than making anything useful.

Speed without judgement always compounds badly.

Microsoft poorly manages token use of most expensive models in a pilot. Then they use that failure to advertise/position their own Github Copilot agents to procurement teams, over the now widely validated Claude Code-based agents.

At least Codex is trying to win validation on merit.

That's very interesting to reconcile with the fact that not too far, Amazon employees feel incentivized to use as many tokens as possible.

Feels about right.

I've launched an internal demo of Claude Code and Deepseek on the same day and we burned through our monthly allowance for Claude in just over a week, with more than a half of that budget being spent in one day. With DS people are unable to go through that same amount of money in a month, not even close.

With that Claude feels like an expensive toy, while DS is a shovel, purely because developers do not feel like they are eating into a precious resource while using it. Also it does not feel like there is much of a difference in capability between Claude and DS-pro. DS-pro and flash do feel like sonnet/opus and haiku, but flash is still very-very capable.

I think whats funny is that employees were most likely already covering the cost for these tools because they are useful. Companies didn't believe employees were using these tools and now have forced their usage and no longer have the costs subsidized.

Similarly companies seem to reward high token usage as a sign of someone willing to play ball with AI and again have forced higher costs on themselves for people reward hacking or using tokens out of spite.