Company AI costs soar as usage explodes

Many tech companies are pushing employees to use AI tools to boost productivity, but this is backfiring. Microsoft asked workers to switch from Claude Code to its own Copilot CLI, partly because costs were rising. Other firms are also cutting back on AI tool use.

Even though AI training costs are falling and token prices are dropping, daily token usage is skyrocketing. AI agents are especially expensive, using up to 1,000 times more tokens than normal queries. The founder of OpenClaw said his team spent over $1.3 million on tokens in a single month.

AI costs now exceed human labor costs, with limited efficiency gains. This follows Jevons paradox: better tech leads to more demand. Nvidia CEO Jensen Huang said engineers need to use tokens worth half their annual salary each year.

Some workers are inflating AI usage to meet targets, driving costs up. If companies try to replace people with AI to save money, it might backfire.