Microsoft sets AI token budgets for engineers, switches to cheaper GPT-5.6 model

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Microsoft has instructed its engineers to reduce AI token consumption, with EVP Jay Parikh emphasizing in an internal memo that excessive token usage is not a company priority. The tech giant has replaced its default internal AI model with OpenAI's more affordable GPT-5.6. Starting July 2026, every division will be assigned specific AI token budget targets to control costs. Employees will also have access to personal dashboards to monitor their individual spending on GitHub Copilot. The move comes after reports that some engineers were spending thousands of dollars per month on AI tools.

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