In a not-so-surprising turn of events, Microsoft is reportedly limiting the use of Claude Fable 5 because of Anthropic's new data retention requirements. It's part of Anthropic's Mythos class of models and ships with powerful capabilities across software engineering and analytics.
Following the new data retention requirements, Anthropic can now retain prompts and outputs generated for up to 30 days. It's also worth noting that content flagged by its safety systems can be retained for up to 2 years to facilitate ample time for investigation or enforcement.
Microsoft imposed a temporary ban on employees’ use of Claude Fable 5 due to concerns that sensitive information, such as customer data and corporate details, could be inadvertently shared. If flagged by Anthropic’s safety systems, this data might become accessible during investigations, potentially exposing it to a rival company (via The Verge).
In the interim, The Verge reported that Microsoft's legal and compliance teams are looking into changes in Anthropic's data retention requirements. Although not directly related, after granting employees access to Claude Code in December 2025 and enabling workflow integration, Microsoft announced that all licenses would be terminated effective June 30.
Reports indicate the move was intended to encourage employees to transition to GitHub Copilot CLI. It was also revealed that Claude Code had become vastly popular among most Microsoft employees, which seemingly prompted the company to shift gears and front its own GitHub Copilot CLI.
There also appears to be a financial play to this decision. With Microsoft’s fiscal year ending on June 30, the timing suggests the company may be aiming to reduce operational costs as part of its end-of-year strategy.
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