Microsoft reportedly pulled engineers off Claude Code after the token bills started getting insane. The wild part is AI is starting to look less like a replacement for workers and more like a second workforce to pay for.

I mean It seems like the layoffs are to offset the cost of AI not the benefits of it. I’m curious how a non SaaS company will truly benefit from AI in a cost effectives way that increases revenue and profitability

lowkey feels like companies are still figuring out whether AI is actually increasing productivity or just increasing spend faster than revenue

We in open-source warned about vendor lock-in for years. Now we're paying per token what we used to pay per librarian. At least librarians made you tea.

“at least librarians made you tea” is crazy 😂 but fr the token economy is starting to look like cloud pricing all over again

Microsoft isn’t exiting Claude - they’re moving engineers to GitHub Copilot CLI which still runs Claude under the hood. The story isn’t “AI is fake,” it’s “we’d rather pay our own bill than Anthropic’s invoice.

Yeah, that’s the actual story. They want to move engineers onto infrastructure where Microsoft owns more of the economics instead of paying Anthropic’s invoice directly.

AI is not doing any of that. Incompetent CEOs do that. The “founder” CEO as opposed to the “industrialist” CEO. Extremely short investment horizons.

nah fr a lot of CEOs are using AI like a quarterly earnings hack instead of actual long term infrastructure

Or maybe Indian coders are as horribly inefficient at using AI as they are at coding in general.

Blaming an entire country instead of the tooling economics is kinda unserious.

Don't they get codex for free lol

that’s the funny part lol even companies building the models still don’t want the bill at scale

I've noticed anthropic employees talk about the increased speed in building their internal tools because unlimited tokens tho so the bill might be worth it

Is the bubble popping?

The money is in the companies that build out the electricity to run all of this. Cheaper power wins.

We’ve been heavily using data for 20 years but it’s largely unstructured and too much free form - AI simply can’t manage that. We will take the next 10 years just to make data usable and in the meantime I’m scared to see what decisions are made and what companies fold.

AI costs are going to force the industry to rethink how these systems are built and orchestrated. A lot of people are about to realize that bigger models and more loops aren’t always the answer. I’m opening up early beta access soon for something I’ve been building around this problem. Looking forward to finally getting it into people’s hands.

Bigger models became the default answer way too fast.

The sustainable alternative to data centers for an AI that brings control, privacy and opportunities in the home of normal people that might lose their jobs due to AI, this project is literally changing the game. Repost if you support.

the funny part is AI started centralized and now people already want it back in their homes again

I think it's the only sustainable way to use AI for personal uses especially. While yesterday they had to guess who you really are, with AI they can literally access every secret thought and intimate info, especially because a lot of people will use that AI for any private matter and that is already happening with the wildest data harvesting ever done before.

Ah ha! Thats precisely what it is. To cut into your business. Like food delivery business model. #ai is simply to take a big portion of any businesses’ revenue shares. They don’t generate new revenue just take a big portion of any businesses operation. Ultimate labor union.

Yesterday I wrote about how AI doesn’t replace coders, but adds a capital cost to them as a toll for their productivity increase

Token costs becoming a line item you have to actively manage is such a weird inflection point. You're basically hiring a tireless junior dev who bills by the second.

Claude is not cheap. At the firm I work at, ~150 ppl use it. We are tracking to a $500k annual spend. I bet we are on the small side of enterprise customers. I can only imagine how large the token costs are for the mega corps. It may be in the tens of millions or even $100M+

@lyemcfly @NaithanJones as you said — code-maxxing ain't free.

Using AI to do creative work is lazy and costly.

People said the same thing about Photoshop and digital editing tbh.

This shit sucks - the tech is set to make money and so its incentive to be a ok in my ass to use so Microsoft makes more money. Good thing is I don’t need it until it’s better

Yeah, sure, nothing to do with switching to Git Copilot instead.

Switching tools because of cost pressure is kinda the entire point of the post though.

lol! When your AI bill gets so high you pull engs off the project that's not efficiency, that's dependency.

Yeah the ‘AI replaces labor’ story gets weird when the AI itself becomes expensive labor.

There's a lesson here, but I am too stupid to figure it out. I'll just ask Claude. Anybody got any tokens I can borrow?

headcount you manage, tokens you meter. nobody built the governance layer for the second one

Token budgets are quietly becoming a management problem now.

new technologies usually aren't adopted by everyone at first because they start expensive. tech bros are the first ones who think they can get away with the opposite and make expensive something they gave away for free

It is. AI is not to reduce cost, but to increase the top line in a quick and flexible way if the enterprise business model allows it.

I’m curious how insane the bill could get. They’ve already laid off people — what are they going to do now? Ask them to come back?

It’s good we’re averting the rebellion of the machines without having to fight a galaxy wide apocalyptic war

second payroll, same burnout

I wrote about this exact dynamic on May 2 — the Aquarium Effect. Public AI makes you a faster fish. But the real moats (proprietary data + unrestricted systems) are widening the gap outside the glass. Full thread here: Swim faster. 🦈

And that’s probably with a price concession in place.

@openservai fixes that problem…

AI could see token costs exceeding payroll at our current pace.

Well well freaking WELLLLLL that AI isn't so cheap compared to good ole American Human beings I guess fckn IDIOTS I'm happy it's failing