Microsoft sells GitHub Copilot to its customers, but it increasingly favors Claude Code internally.
Microsoft sells GitHub Copilot to its customers, but it increasingly favors Claude Code internally.
is a senior editor and author of Notepad, who has been covering all things Microsoft, PC, and tech for over 20 years.
Developers have been comparing the strengths and weaknesses of Anthropic’s Claude Code, Anysphere’s Cursor, and Microsoft’s GitHub Copilot for months now, looking for a winner. While no individual AI coding tool manages to be the best at every task that software developers do each day, Claude Code is increasingly coming out on top for its ease of use, both for developers and nontechnical users.
It seems like Microsoft agrees, as sources tell me the company is now encouraging thousands of its employees from some of its most prolific teams to pick up Claude Code and get coding, even if they’re not developers.
Microsoft first started adopting Anthropic’s Claude Sonnet 4 model inside its developer division in June last year, before favoring it for paid users of GitHub Copilot several months later. Now, Microsoft is going a step beyond using Anthropic’s AI models and widely adopting Claude Code across its biggest engineering teams.
Microsoft’s CoreAI team, the new AI engineering group led by former Meta engineering chief Jay Parikh, has been testing Claude Code in recent months, and last week Microsoft’s Experiences + Devices division were being asked to install Claude Code. This division is responsible for Windows, Microsoft 365, Outlook, Microsoft Teams, Bing, Edge, Surface, and more.
Even employees without any coding experience are being encouraged to experiment with Claude Code, to allow designers and project managers to prototype ideas. Microsoft has also approved the use of Claude Code across all of its code and repositories for its Business and Industry Copilot teams.
Software engineers at Microsoft are now expected to use both Claude Code and GitHub Copilot and give feedback comparing the two, I’m told. Microsoft sells GitHub Copilot as its AI coding tool of choice to its customers, but if these broad internal pilot programs are successful, then it’s possible the company could even eventually sell Claude Code directly to its cloud customers.
Microsoft is now one of Anthropic’s top customers, according to a recent report from The Information. The software maker is also counting selling Anthropic AI models toward Azure sales quotas, which is unusual given Microsoft typically only offers its salespeople incentives for homegrown products or models from OpenAI.
Microsoft’s decision to adopt Claude Code more broadly among its engineering teams certainly looks like a vote of confidence in Anthropic’s AI tools over its own, especially as it’s encouraging nontechnical employees to try out coding. But the reality is that Microsoft’s developers are likely to use a mix of AI tools, and adopting Claude Code is another part of that tool set.
“Companies regularly test and trial competing products to gain a better understanding of the market landscape,” says Frank Shaw, Microsoft’s communications chief, in a statement to Notepad. “OpenAI continues to be our primary partner and model provider on frontier models, and we remain committed to our long-term partnership.”
While Microsoft remains committed to OpenAI, it is increasingly working with Anthropic to bring its models and tools to Microsoft’s own teams and the software it sells to customers. Microsoft and Anthropic signed a deal in November that allows Microsoft Foundry customers to get access to Claude Sonnet 4.5, Claude Opus 4.1, and Claude Haiku 4.5. The deal also involves Anthropic committing to purchasing $30 billion of Azure compute capacity.
Microsoft has also started favoring Anthropic’s Claude models inside Microsoft 365 apps and Copilot recently, using them in specific apps or features where Anthropic’s models have proved more capable than OpenAI’s counterparts.
The big question here is, what does the increased use of Claude Code at Microsoft mean for its more than 100,000 code repositories? Microsoft told me last year that 91 percent of its engineering teams use GitHub Copilot and a variety of teams have been using the AI tool to speed up mundane tasks. Microsoft’s use of AI tools has been largely restricted to software engineers, but with Claude Code and Claude Cowork, Anthropic is increasingly focused on making coding and non-coding tasks more approachable, thanks to AI agent capabilities.
Microsoft is embracing the ease of use of Claude Code to allow more nontechnical employees to commit code using AI, and this broad pilot will certainly highlight the challenges and benefits of that shift. It also puts further pressure on junior developer roles, with fears in the industry that these roles are increasingly disappearing because of AI. Microsoft just took another big step toward a future where more autonomous AI agents are creating code, further wrestling control from its software engineers.
It’s Xbox time
Microsoft is getting ready to show off two of its biggest Xbox games this year, Forza Horizon 6 and Fable, later today as part of its Xbox Developer Direct stream. There will also be a first in-depth look at Beast of Reincarnation and at least one other game shown, I’m hearing. Double Fine is ready to show off Kiln, a multiplayer, team-based brawler. I understand Double Fine has been holding playtests recently, where you play as a spirit that can inhabit pottery and carry water to douse an opponent’s kiln and put out a fire.
I wouldn’t be surprised to see Kiln appear as an early preview in the coming months, followed by Forza Horizon 6 in May and then Halo: Campaign Evolved. I keep hearing that both Fable and Gears of War: E-Day are currently targeting a release in the second half of this year. Microsoft is keen to release new Forza, Gears, Halo, and Fable games in 2026 to mark 25 years of Xbox.
- Microsoft’s first Windows 11 update of 2026 stopped some computers from shutting down. It’s only January and Microsoft has had to rush out an emergency out-of-band fix that stopped some Windows 11 PCs from shutting down. The issues were limited to machines running Enterprise and IoT editions of Windows 11 version 23H2, but it’s yet another buggy update for Windows, which is becoming increasingly common.
- Microsoft’s free Xbox Cloud Gaming is coming soon with ads. Microsoft is getting closer to launching its free streaming option for Xbox Cloud Gaming. The ad-supported feature has started appearing inside the Xbox app for PC, indicating “1 hour of ad-supported playtime per session.” I’m expecting to see this rollout with preroll ads in the coming weeks, but there could be limits of up to five hours free per month.
- Microsoft wants to build 15 data centers in Mount Pleasant, Wisconsin. The empty land formerly owned by Foxconn is about to be transformed into Microsoft data centers. Leaders of the local village in Mount Pleasant, Wisconsin, approved plans for the data centers earlier this week, and final approval could come next week. Foxconn’s failed Wisconsin project had promised 13,000 jobs, but now the land will be filled with a 1.2-million-square-foot data center project that will hold hundreds of thousands of Nvidia’s AI GPUs.
- The Xbox app is now available for all Arm-based Windows 11 PCs. After a rocky start to gaming on Windows on Arm, Microsoft has updated its Xbox app this week so it’s fully compatible with all Qualcomm-powered devices. More than 85 percent of the Xbox Game Pass catalog is also now compatible with Arm-based devices, but the majority of games will still need to be emulated using Microsoft’s Prism technology.
- Microsoft Paint now has an AI-powered coloring book. Microsoft is adding more AI features to its Paint app this week. Windows testers can now try out a coloring book feature that lets you create coloring book pages from a text prompt. It’s available inside the Copilot button in Paint, and you have to have a Copilot Plus PC to be able to use it. Notepad (the app!) is also getting expanded Markdown syntax features and a new welcome experience to highlight features. I never thought I’d see the day that Notepad, a lightweight app, would need a welcome screen because of all the features Microsoft has packed in.
- GitHub has a new Copilot SDK. Microsoft is announcing a technical preview of its GitHub Copilot SDK today, which brings the power of the GitHub Copilot CLI to any app. It essentially allows developers to bring GitHub Copilot capabilities as a programmable SDK for Python, TypeScript, Go, and .NET. Microsoft teams have already used this to build custom GUIs for agents, summarizing tools, YouTube chapter generators, and more.
- Satya Nadella and former British Prime Minister Rishi Sunak chat AI. Former UK leader Rishi Sunak took on a senior adviser role at Microsoft and Anthropic last year, and he’s now appeared alongside Microsoft CEO Satya Nadella to discuss the future of AI. The roughly 30-minute talk didn’t have any surprising news, but Sunak did agree with Nvidia CEO Jensen Huang that “you may not lose your job to AI, but you may well lose your job to someone using AI.” Nadella thinks AI will make us all “managers of infinite minds,” much like how we have “information at your fingertips.”
- Microsoft now sponsors the Mercedes-AMG F1 team. Microsoft is switching its F1 allegiances from Alpine to Mercedes-AMG for the 2026 season. A new multiyear partnership will see Mercedes-AMG use Microsoft technologies for race team operations and plaster the Microsoft logo in prominent positions on the 2026 Mercedes-AMG F1 car and on racing suits. There’s a big technical shake-up for the 2026 season, with all-new chassis, power units, and fuel regulations.
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