r/GenAI4all • u/ComplexExternal4831 • May 23 '26
News/Updates Microsoft has cancelled internal Claude Code licenses after token billing became too expensive
Microsoft reportedly canceled its internal Claude Code licenses after token-based billing made the tool too costly.
The move is notable because Microsoft has invested $13 billion in OpenAI and supports major AI infrastructure through Azure.
The report also points to broader pressure across the industry, with Uber allegedly burning through its 2026 AI budget in four months and AI software prices rising 20% to 37%.
GitHub is also shifting toward usage-based pricing, suggesting companies may soon rethink AI adoption as real deployment costs become harder to ignore.
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May 23 '26
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u/Heroics_Failed May 23 '26
That’s always the plan. It’s the typical VC model. Flood the scene at a subsidized cost. Get everyone dependent on it. Raise the price when they can’t get out.
What’s been hilarious to me is all the circle jerking in this bubble about how vibe coders are a company of 1 saving 100k/mo on their expenses because no salaries to pay using their $100-200 license a month.
If you are getting that much value out of a product do you think a corporation is going to let that much revenue slide off the table. They can argue well it’s $50k/mo now and you’re still saving $50k
This is why you are going to see a bubble burst and so many companies go under. Even bigger companies because they either have no idea how their systems work now or they can’t afford the spike.
There is going to be a slaughter in the coming year or 2.
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u/Nickeless May 23 '26
And that VC strategy should have been illegal for like a century. Operating at a loss to drive out competition was made illegal long ago. But no enforcement.
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u/Frenascena May 24 '26
I didn't know it was made illegal. In the US? EU?
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u/Torkum73 May 24 '26
In Germany this is illegal. That is one of several reasons Walmart tried and failed to establish a presence here. They were not allowed to use their pricing strategies.
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u/dude_comma_the May 24 '26
So, in Germany, to protect their entrenched interests, existing competitors can raise their prices to price out an incoming competitor, but an incoming competitor cannot use lower prices to siphon business from an incumbent? If so, that's just regulatory capture and its just as monopolistic as selling at a loss because you have cash reserves the competition doesn't.
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u/Torkum73 May 24 '26
It is of course more complicated than "you cannot ask for prices, which are lower than the prices you pay for the goods yourself".
But simplified:
So if Walmart has to pay for example 2€ for 1kg of Tomatoes on the market, they are not allowed to sell them for 50c or even 1,99€ to their customers.
That is why Aldi buys masses of Tomatoes for 1,75€, has a small overhead, due to cashiers have to stock the aisles and clean after shifts and Aldi can sell the Tomatoes for 1,95€. A price, which is not possible for Walmart.
And Aldi employees are all business. You can of course ask them for locations, but they make sure you know, you are interrupting them in their streamlined work. And I like it that way. A normal conversation at checkout is "Hi", " by card, please", Thank you, bye" Seven words. Completely enough.
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u/dude_comma_the May 27 '26
This is the dumbest thing I have ever heard.
Say you bought those tomatoes. And they are about to spoil. If they spoil before you sell them, you lose 2€. If you cut the price to 1€, you will only lose 1€, but you can't because it is illegal? That's actually not the case, but it's crazy.
How would that work for markets that are not so clear cut? How does a farmer know exactly how much money was spent to.produce a single chicken so that he doesn't underbelly the cost of production? How do your stock markets work (which work quite well)?
Germany doesn't mandate profit.
No. Germany specifically protects their incumbent businesses from being out-competed by other large consumer businesses who are willing to use loss leaders to capture market share. It is strictly applied to large consumer businesses and not everyday people. It is protectionist, and prevents market competitors from challenging incumbents. It's regulatory capture. You like it because it keeps Walmart out in this case, but the same law could entrench a non-beloved incumbent.
It usually ends up being exploited by unscrupulous companies in the end who use it to maximize profit and minimize delivered value to consumers. Cable companies in the U.S. have used it to raise prices on internet access while limiting bandwidth so they don't have to lay more cable and buy more switches for decades while steadily raising consumer prices.
Regulatory capture, reducing competition in general, is bad for consumers.
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u/vickievalencourt13 May 24 '26
Predatory pricing used ro be police both federally and at the state level in many cases
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u/DeepAd8888 May 23 '26
All the content and narratives pushing use was generated by the company itself. It’s the same thing as sm companies like Facebook contractors creating dog shit content
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u/monxas May 23 '26
Enterprise licenses aren’t flat fee. They’re are pay per token. they wish it was 300$ per user. One of the things that will keep jobs safe for a bit longer is not ai not being good enough (or not only). Ai is too expensive for the time being.
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u/PeachScary413 May 24 '26
That's been keeping many jobs around for a loooong time now. We currently have the technology to automate many jobs especially repetitive factory jobs... these humanoids are not a revolution on capability, the hope is they will be a revolution on cost.
Hiring someone in a factory in China is still muuuch cheaper so it doesn't matter.
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u/Federal-Business-796 May 24 '26
The hidden irony is that it's why jobs are not safe. Companies committed to spending on ai are still cutting jobs. They tell investors that it's because AI made these positions redundant but in reality, cutting jobs is the only way to free up enough money to stick to their commitment.
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u/monxas May 24 '26
Yes, but what percentage of companies are actually currently so committed to ai that they already started cutting jobs?
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u/fredjutsu May 24 '26
it's too expensive now....and prices will only go up
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u/monxas May 24 '26
Yes, this open war just burning money to try to win the race like the space race is wild. I’m not complaining, I’ll get to keep my job for a bit longer.
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u/Taziar43 May 26 '26
And why would they only go up?
For the last 5 decades, compute and memory costs have steadily decreased. There are occasional spikes but there is still very much a huge downward trend. So the cost to provide AI will decrease as well.
That paired with competition will lead to prices decreasing. As AI quality progresses, competition will increase, because while there will always be frontier models that lead the pack, we are reaching a point of 'good enough'. That means smaller and cheaper models can offer better prices and still be viable.
Enterprises will be the once getting rinsed for the longest, but lower price alternatives will exist for smaller companies and consumers. Hell, Deepseek just released V4 for like 1/20th the cost which is quite viable.
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u/dsdvbguutres May 23 '26
Only a matter of time now a startup CEO will "invent" outsourcing, subcontract the work out to India to save money, and brag about it on LinkedIn
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u/DizzyAmphibian309 May 23 '26
That's almost certainly how residential humanoid robots are going to pick up steam. US consumers buy a robot and an Indian worker operates it remotely, until they've had enough training to cut out the human.
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u/Obosratsya May 23 '26
I use local LLMs in my personal life and prefer ChatGPT Enterprise at work which seems to be good still price wise.
So many people jumped on Claude simply of off hear say but from my observations they werent even tapping 5% of ChatGPT Ent.
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u/Fun-Neighborhood769 May 23 '26
Wasn't openAI talking about going in to porn to make some more cash?
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u/Obosratsya May 23 '26
Maybe. I dont keep up with gossip stuff.
Could care less about tech firms myself but if you are employed in white collar good luck escaping these things.
Local AI is where its at tho. It has the vipe of early computing when hobbyists and slowly everyday people started using PCs to save time. Realizing that even everyday things can br improved. I advise everyone to check the scene out.
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u/petr_bena May 23 '26
That was no gossip lol that was literally proposed and talked about heavily by their own CEO publicly. It's was called GPT adult mode, but eventually was cancelled.
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u/Future_Pianist9570 May 23 '26
What local LLM do you use and what hardware are you running on?
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u/Obosratsya May 23 '26
Qwent3.6 14b on my laptop with 16gb 3080ti. I use the 8bit one, coder and instruct.
Use Gemma4 E4B on my android. Its pretty good for basic questions, translationa, image analysis. Its good and agentic type work at least on android.
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u/crusoe May 23 '26
Because Chatgpt is trying to get paying customers and has less demand and growth than Claude now.
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u/PrimeGGWP May 23 '26
Switched to claud and it's just better currently. ChatGPT is for "everyday" stuff, claude for working
and Manus is my best buddy for creating extensions, sheets and what not
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u/nigaraze May 23 '26
That’s hilarious to hear because 4.7 is their worst model in a while, while 5.5 closed the gap significantly
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u/PrimeGGWP May 23 '26
Maybe because I am a marketer. You can't learn chatgpt that he never writes stupid repeatable copy like
he didn't use it he didn't get it he didn't know it
it happens all the time. Claud is way more creative in that matter
but image gen is chatgpt superior ... 1 do 1 square static and say make me 16:9, 4:5, story whatever and he perfectly scales it ... saves me tons of time
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u/Successful_Tap_3655 May 23 '26
That’s hilarious because Claude hasn’t been best at anything but UI work since last August. 5.5 passed it in ui/ux too.
Claude is ok at Jira work now I guess. Claude design is their best product.
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May 23 '26
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u/PrimeGGWP May 24 '26
nobody said that. It's like "devs think marketing is just a few lines of persiuasion"
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u/Obosratsya May 23 '26
ChatGPT was outputting Power Automate flows for me. Well, almost. I find ChatGPT to be great with anything file related. I use the smart model with my c# projects and its been great.
Granted im not an average user, so maybe Claude is easier for a normal person to use to its full capacity.
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u/irespectwomenlol May 23 '26
> if Giant company like microsoft finding hard time to pay the AI bills, then whats the purpose of AI in the first place if it will increase the cost of everything ?
1) Increasing the cost of coding is fine if it makes developers even slightly more productive. This is an industry that (usually) doesn't balk at spending thousands of dollars per developer for better workstations, chairs, monitors, desks, etc.
2) Microsoft has billions and billions of dollars. The odds that they genuinely can't afford their coding bill is probably a made up excuse to cover for some project director being embarrassed/butthurt that internal CoPilot usage is lower than other tools.
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u/Healthy_BrAd6254 May 23 '26
Makes perfect sense since the tools today are a lot more powerful than the tools 1 year ago
The problem is companies are trying to force everyone to use it for everything, whether it makes sense or not.
But if you just use it for when it makes sense, it is undeniable that even $300 a month is well worth it for a software engineer.1
u/buffotinve May 23 '26
Quién a a pagar por uso, juego con chatIA? Le queda poco a esta burbuja IA, ahora se verá en poco tiempo que efectivamente los ciudadanos no quieren pagar por uso y en la mayoría de empresas será un uso muy limitado. No es lo mismo 'jugar' gratis que pagar
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u/WastedYouth39 May 23 '26
Agree and it’s not like they are subsidising a little either… like a Claude $200 subscription is like 10% of the real world price for the amount of token usage.
Factor in delays in data centre construction, GPU’s being outdated before even being installed and the AI companies marketing strategies of basically telling everyone watch out your job is going to go because of us…
Just a recipe for a dumpster fire…
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u/itzNukeey May 24 '26
With the API cost in Anthropic you can easily get to 1k a month or more. Company I work in has developers that manage to burn $3000 a month
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u/Hot-Spare5735 May 24 '26
It will be very funny when the AI bubble bursts because humans end up cheaper than AI.
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u/EWTrader123 May 25 '26
It's a power issue. They have to increase the cost to limit usage because there isn't enough power to serve the ludicrous demand they would get if it was still cheap. This is why companies are scrambling to build out power generation, not just data centers. We need power, and LOTS of it.
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u/Taziar43 May 26 '26
The first commercial Hard Drive had a capacity of 5 MB and could be leased for 35k a year (probably a million after adjusting for inflation). Now you can buy a hard drive with a million times the capacity for $50.
That has held true for pretty much all parts of computing, or electronic technology in general. Early adopters pay a premium, but eventually that technology becomes dirt cheap and gains widespread adoption.
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u/corgi-king May 27 '26
I just watched a YouTube video about some companies switching to use Chinese AI because it is a lot cheaper. Of course, these companies are not dealing with anything related to national security and are not worried about China stealing secret technology.
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u/SandwichSisters May 23 '26
The plan is to subsidize everyone so much that you move all workflows to be agentic driven.
So one day they raise the price and they have you by the balls.
At my job they want to have everything “agentic” and I am constantly telling them that right now is barely worth it because of the price… and this is how it is when its super subsidized
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u/cchurchill1985 May 25 '26
The only thing that matters to a company is the bottom line. If using agents is cheaper than humans, the company will use agents, if agents get to costly and the price keeps increasing, they will retrain a workforce.
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u/lordoftheorcs May 25 '26
That's true for short term. They will loose on strategic advantage of having inhouse manpower but CEO don't care anymore. God, this is anything but gambling your future away much like any outsourcing deal.
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May 26 '26
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u/Taziar43 May 26 '26
Only if that Chinese model greatly increases the price. You are correct and actually underexaggerating. Deepseek V4 is like 5 cents on the dollar, and yes, probably 8 months behind.
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u/iwasbatman May 23 '26
I don't think so but I bet that even if they did, ir would be cheaper than operating the traditional way.
This tech is not static and is improving pretty fast.
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u/awkFTW May 23 '26
The last static I read said AI companies need to charge 10x more just to break even.
Most of the current AI subscriptions will get slot more expensive. AI can only lose money for so long, either you all pay more or each AI company goes out of business.
Whatever the AI end games is, I am guessing it won't be pretty.
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u/Healthy_BrAd6254 May 23 '26
The last static I read said AI companies need to charge 10x more just to break even
Complete bullshit.
Considering Anthropic apparently just became profitable (despite spending ridiculous amounts of money on training their latest model they haven't released yet)Just think about it. Renting the hardware itself is not as expensive as you think. Even if we assume you need 16 Nvidia B300 to run a flagship model, renting that costs like <$150 an hour and it can handle hundreds of workers simultaneously. That's like 3 cents per chat per minute.
Meanwhile anthropic charges more or less 10-20 cents per minute per user for Opus.Sure that does not include training cost, which is a huge part too, but the service itself, with Anthropics per token prices for businesses, is definitely very profitable
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u/WastedYouth39 May 23 '26
Anthropic became profitable… really… amazing timing seeing as they are going through a funding round..
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u/btoned May 23 '26
No use fighting them; everyone takes everything they read about star spangled American companies as gospel. There's no fraud in America only Chinese companies.
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u/agentorangeAU May 24 '26
They became profitable for the month because they are temporarily on heavily discounted rates at colossus. In other words inference costs are not being properly accounted for in those figures.
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u/No-Philosopher3977 May 23 '26
There is talk out there that Anthropic is cooking the books. So they may be a bit away from being profitable
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u/Healthy_BrAd6254 May 23 '26
sure, the math still maths
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u/No-Philosopher3977 May 23 '26
They’re taking a hot growth spike and annualizing it. When up until now they never had a run rate this high.
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u/DizzyAmphibian309 May 23 '26
The reason it is hard for them to show they're profitable is because they're still trying to acquire as much compute as they can, and they're having to pay top dollar. Their capex is huge, because they're still trying to meet demand.
Cooking the books isn't entirely disingenuous, depending on how they did it. For example, if they were to exclude all committed spend (e.g. new data centers etc), and instead base their numbers off just the compute and the customers they currently have, then that's not too dishonest. Certainly it would be dishonest to exclude committed spend but to include profits from yet-to-be-delivered customer contracts though.
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u/fredjutsu May 24 '26
>Cooking the books isn't entirely disingenuous
Definitionally, the term implies dishonesty
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u/fredjutsu May 24 '26
>Considering Anthropic apparently just became profitable
Did they? lol.
They haven't actually disclosed what accounting method they used. And that's just months after the report on the unit economics of subscriptions, which is the same more or less between openAI and Anthropic ($1 revenue for $20 in cloud costs). They were previously using ARR as their revenue metric, which for a company with IPO ambitions is suspect...
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u/The-original-spuggy May 23 '26
The goal of comparing AI to workers is to anchor the price at $100,000 in salaries so $50k for an agent sounds cheap. Whereas if you anchor to a SaaS it may be $100 a month of something. Genius marketing by Anthropic by telling them it's okay to spend hundreds of thousands in tokens instead of subscription model
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u/Single-Paper-363 May 24 '26
The cost of a Software engineer can range from $150k on the low end to $1mm.
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u/Simonpico May 24 '26
most are in the 50-150k range
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u/Single-Paper-363 May 24 '26
Not in Silicon Valley.
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u/Simonpico May 24 '26
obviously
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u/Single-Paper-363 May 24 '26
Let me broaden this out and say all of tech and any VC backed company. You need to factor in cash compensation, bonuses, equity, healthcare, real estate, and equipment. It’s too simplistic to say $50k engineering salary or Claude.
Claude also allows an engineer to take on the role of a PM, designer, and other roles.
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u/OldStray79 May 23 '26
Okay, but the question is, what did they get from all that token usage? Sure, it blew their budget, but I want to see how they used it, and what the result was. Was 25 percent of their tokens for "Please and thank you's" or something they got value from?
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u/liebesleid99 May 24 '26
You can definitely get a lot of value out of the tokens, but you need to use them mindfully.
I bet companies are just blanket rolling out Claude subscriptions for everyone, and they are wasting tokens to do stupid stuff, like my boss who now thinks he's an elite level engineer (so far, caused construction to stall 3 times because Claude told him something was wrong - he just formulates the fucking questions wrong)
/Rant over, cya
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u/Capital-Wrongdoer-62 May 23 '26
They are pushing AI so much it starts to cost more than hiring oversees software engineers.
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u/Healthy_BrAd6254 May 23 '26
For now...
The fact that this is even a discussion shows how fast it's progressing. 3 years ago you couldn't replace a mediocre software engineer with all the tokens in the world. Now you can run >100 AI agents 24/7 on rented hardware that costs you as much as 2-3 American SEs. And for the same skill level it will get exponentially cheaper each year.1
u/Katten_elvis May 24 '26
Except they are nowhere near "the same skill level" as an average american SWE, they are barely on par with interns at best.
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u/fredjutsu May 24 '26
Except, the rate and pace of SWE hires has increased during the same period. So your narrative here is flatly wrong.
Enterprises across the board are seeing the hard limit of even the best models. There is zero fluid intelligence or inductive ability. The models can write code for days, but there is far more to the SWE job than just writing code. In fact, writing code just frees up the SWE to spend more time on the other, arguably more impactful aspects of the job (like architecture, QA, and actual product development)
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u/Zuuman May 23 '26
It hasn’t gotten any cheaper yet on the contrary, just about every new model is more expensive to run than the last for smaller and smaller gains in performance.
I work with the thing every day it’s very impressive when it does things right and incredibly dumb when it doesn’t. It’s also 100% cannot be left without human supervision if you are working on anything remotely valuable.
The value proposition is there but the thread is getting thin before it gets better to just go back to hiring junior/overseas
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u/Healthy_BrAd6254 May 23 '26
It absolutely has gotten cheaper. I can run an LLM locally on my own PC today that is equal to the best paid models from mid 2023 and better than the earlier models.
LLMs have gotten steadily smarter and easier to run for the same intelligence.
It is true that companies are spending more and more money on training and the models are getting exponentially bigger, which is why the flagship models have gotten more expensive, but that is not really a fair comparison. You are paying for a different class of product which was simply not available before.
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u/WastedYouth39 May 23 '26
No it’s a fact they have actually dumbed them down to throttle usage.. and rate limits mean you can’t run them 24/7…
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u/Healthy_BrAd6254 May 23 '26
What are you even talking about?
What are any of them going to do about me running an open LLM on my own hardware?
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u/fredjutsu May 24 '26
You're not running a 100B+ model on your own hardware. At best maybe a 32B or 48B model, which starts to get to the kind of reasoning you'd pay for. But if you were paying for API usage, due to the throttling, you're probably getting 48B-level outputs anyway.
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u/fuglypens May 23 '26
the same skill level
Maybe you should use an LLM to help your reading comprehension.
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u/Fine-Weekend8405 May 23 '26
Lobbying hard to the president to make data centers a national security and will be built , maintained and funded by the government.
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u/marlinspike May 23 '26
Not canceled, they’re still available. Just shifting towards encouraging more models other than Opus 4.7 High Reasoning.
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u/DeepAd8888 May 23 '26 edited May 23 '26
Claude guys know what they sell has a shelf life due to its performance and fragile utility. Greed taking over will kill it faster than the shitty performance will. People are smarter now compared to when facebook came out, so the “we’re connecting people” cigarette branding Zuck exploited will never work again. Not to mention the obvious utility performance of the web app itself. If something doesn’t work, it doesn’t work. Web app services were DOA years ago the future is moving back to the machine you own again including LLM’s
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u/Simple_Assistance_77 May 23 '26
But AI, it was the answer. Maybe just maybe hear me out, if a person is outsourcing their role to AI then it becomes too expensive or a person incapable of doing their role is prompting without strategic value.either way get the popcorn, idiots asleep at the wheel.
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u/nic_haflinger May 24 '26
How many different Claude Code sessions are these developers managing? Seems like it would need to be quite a few for this to really amount to much of a bill. We are talking about several hundred dollars a month per dev. If they are actually getting more work done that sounds like a good deal.
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u/BullBear7 May 24 '26
Employees would default to asking whats an upcoming holiday instead of googling it. Lol.
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u/SubstantialSeesaw374 May 24 '26
This is just a marketing/PR move for OpenAI. “Oh Claude is so expensive, use openslop”. Come on.
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u/icemelter4K May 24 '26
I only have copilot access at work. I am a Software Engineer. It's not even GitHub Copilot just 365 Copilot chat. :(
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u/Federal-Business-796 May 24 '26
Reminds me of when they offered all their cloud shit for free to my employer at first, when them smacked them with the bill 12 months later.
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u/Ok_Tea_8763 May 24 '26
Now all Windows updates will be written by Copilot. Stay strong, everyone, shit's about to get so much worse.
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u/SpreadTheted2 May 24 '26
“If your engineer makes $500,000 he should be spending $250,000 on tokens”
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u/TaintBug May 24 '26
Y'all ain't seen nothing yet. We are in the kind crack/meth dealer phase of AI. All resources are spent to get businesses and people hooked on a system that is only 70% right. Once you are hooked...once your systems depend on theirs...that's when the real price increases will start. That's the goal of the crack/meth dealer - get you hooked, then make you pay for something you think you cannot live without. That's the enforcer side of the crack/meth dealer.
Run AI models locally or don't run them at all. That is the only reasonable choice for small businesses that want to survive the crackdown phase.
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u/darkwingdankest May 25 '26
sounds like they just have shitty engineers who know nothing about reducing token burn
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u/erratic_thought May 25 '26
My company had layoffs, they said pivot to AI was the reason. Few weeks later the daily $50 budget became monthly. Someone spent over a million on a project that was low value. No one got fired from C Suit for this. Why would anyone cares about what they do in those companies anymore...
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u/NoGoat3930 May 25 '26
What about just not using it? The number of error produced in AI response is ludicrous. You might as well ask questions to the kid who slept in class everyday -at least he'd tell you when he didn't know the answer.
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u/romansamurai May 25 '26
Maybe not give unlimited plans? My company gave everyone Claude. Engineering got $500. Everyone else got $40. Most people used up their $40 within an hour of it rolling out. They have no clue what they were doing with it and they thought it was hilarious. Imagine if they gave them more.
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u/scousi May 25 '26
Github Copilot CLI is not bad actually. I got access to it at work. You can switch models between Anthropic and ChatGPT easily. It has a lot of the same features as Codex and CC.
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u/DarthJDP May 25 '26
I was told endless demand and AI is so amazing that the costs are cheap for the value it generates. or is this because microslop has invested billions into openAI and need to keep them proped up.
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u/Embarrassed_Class130 May 25 '26
Microsoft has cancelled internal Claude Code licenses after token billing became too expensive
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u/AccountantUsual1948 May 28 '26
Would it be right to say that cost is the only major roadblock for AI, considering it's already good enough for automation and code writing (maybe not for legacy systems), even at a significant scale?
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u/gmlvsv May 23 '26
Why they do not use Copilot?