Microsoft Cuts AI Costs Amid Deflationary Shift; Chinese Model GLM-5.2 Undercuts OpenAI by 83%

According to The Verge, Microsoft Corp. began cancelling most of its Claude Code licenses last month as companies increasingly manage AI spending like traditional operating expenses. This month, Chinese startup Z.ai released GLM-5.2, a model delivering comparable coding performance to OpenAI and Anthropic offerings at roughly one-sixth of the cost, according to Reuters. The move underscores a broader trend: as open-source models narrow performance gaps with frontier systems and inference costs decline, AI is entering its first deflationary phase. CEO Satya Nadella also questioned this week whether a future dominated by a handful of premium providers is sustainable, arguing instead for a more competitive ecosystem where enterprises choose among multiple models rather than pay premium prices for frontier vendors.
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