Microsoft's Satya Nadella slammed Anthropic's AI model restrictions in a meeting with engineers

"If you use Fable, when it refuses for any random thing, it just is like, when was the last time you had a creation tool that was so editorially controlled?" Nadella told engineers working on Microsoft's Copilot AI software, according to CNBC, which obtained a copy of his remarks. "It doesn't make sense."

The comments were directed at engineers building Copilot and came as Anthropic has acknowledged its own restrictions are catching more benign requests than intended. When Anthropic restored Fable access on July 1 — after cutting it off to comply with a U.S. government export control directive — the company said the updated safeguards would flag a somewhat higher share of harmless requests than the previous version had. A support page indicates that queries touching on certain elements of large-scale model development, and other subjects, may be handled by an earlier version of Fable rather than the current one.

The criticism is notable given how closely the two companies are tied. The November deal saw Microsoft commit $5 billion to Anthropic while Anthropic pledged to direct $30 billion toward Microsoft's Azure cloud platform. Microsoft also launched Copilot Cowork this year, a workplace productivity offering built around Anthropic's technology. Microsoft declined to comment on Nadella's remarks, and Anthropic did not respond to a request for comment.

Nadella also used the meeting to argue that companies should not have to rely on a handful of AI providers. "It can't be that there are only two companies in the world with token capital, and everybody else is renting it," he told the engineers. "It makes no economic sense."

Anthropic has faced mounting scrutiny from multiple directions. The company has been designated a supply-chain risk by the Pentagon after it refused to allow its models to be used for autonomous weapons or domestic surveillance — a label Anthropic has called legally unsound and challenged in court. Despite the dispute, Anthropic has reported its annualized revenue climbing from roughly $9 billion at the end of 2025 to more than $30 billion.

Microsoft shares are down 17% on the year, a stark contrast to the Nasdaq $NDAQ Composite's 11% advance over the same period.