Gartner has slammed AI vendors’ lack of transparency, saying developers are facing sharply increased costs from coding agents.

Since the main AI coding agent vendors have shifted from seat-based licensing to consumption-based pricing, developer teams now face highly variable cost structures.

Developer teams face an emerging problem of escalating costs, said Nitish Tyagi, senior principal analyst at Gartner. AI coding bills were leaping from $20 or $100 to $2,000 to $5,000 per developer per month, while in extreme cases, the bill might hit $20,000 in token charges.

However, software engineering departments get little insight into how token consumption is calculated and billed, making it difficult for them to forecast and control costs accurately. AI coding vendors have not yet delivered built-in features to allow developers to optimise costs in AI coding agents, resulting in cost escalation, Gartner said.

“None of the vendors have incredible features when it comes to cost optimisation,” said Tyagi. Instead, he said vendors were focusing on the concept of “tokenmaxxing” to “boost the high” of token consumption, suggesting that if

developers increase the number of tokens, they will increase productivity gains.

“There is no direct relation between the increase in token consumption and an increase in productivity gains,” he said.

Gartner recommends developer teams optimise token consumption and adopt strategies such as context engineering practices, where software engineers improve the input context provided to AI systems. Another recommended strategy is model routing, where engineering and platform teams direct simpler, high-frequency tasks to smaller models, using frontier models only for complex, high-value work

“All of these things will improve the output quality, and, therefore, will increase the productivity gains as well, so while there is no direct relation between tokenmaxxing and productivity gains, there is a relation between optimisation of token consumption with the output quality,” Tyagi said.

As a result of the lack of cost optimisation tools among vendors and consumption-reduction strategies among users, AI development is in a situation where a developer’s coding agents may cost more than they earn, at least in some parts of the world. Gartner predicts that by 2028, AI coding costs will overtake the average developer’s salary due to rising LLM token consumption and the shift to consumption-based licensing models.

“We’re not saying AI token cost will be higher than every developer’s salary on the planet, because US salaries tend to be higher than in India, for example. But current token costs are already more than most of the salaries in India,” he said.

However, the cost of coding agents does not vary according to where they are consumed, meaning AI coding costs for a developer in India may be equivalent to the salary of an engineer with four to six years’ experience, Tyagi said.

“We’re not saying AI token costs will be higher than every developer’s salary on the planet, because US salaries tend to be higher than in India, for example,” Tyagi said, adding that token costs do not vary by location, and in India they may already be equivalent to the salary of an engineer with four to six years’ experience.

Flexera has published research showing that every organisation surveyed uses generative AI public cloud services. It also found that 85% now see managing cloud costs as their main cloud challenge.

The findings point to growing pressure on technology budgets as companies juggle hybrid cloud estates, AI spending and limited visibility over usage. Some 17% of organisations exceeded their public cloud budgets in the past year, while estimated wasted cloud spend rose to 29%, reversing a five-year decline.

Hybrid cloud has become the dominant operating model in the survey. Flexera found that 69% of organisations now use a hybrid cloud approach, rising to 78% among those with more than 5,000 employees.

Spending patterns also point to larger, more complex estates. Among organisations spending more than USD $500,000 a month on cloud, 79% operate hybrid environments.

The report suggests AI is adding a new source of cost volatility. While all respondents said they use generative AI public cloud services in some form, 45% described that use as extensive and 30% said cost unpredictability was one of the biggest challenges in scaling AI workloads.

Chris Andersen, Chief Financial Officer at Flexera, linked those pressures to broader changes in how finance teams track technology spending.

“The conversation around cloud costs has shifted significantly. It has moved from spending more on technology to solve problems to managing increasingly complex environments that have often evolved organically over time.

“Many organisations have not intentionally designed hybrid or multi-cloud strategies. Instead, these environments emerge through acquisitions, new business requirements or teams independently adopting different platforms. As a result, finance leaders are being asked to manage technology estates that are much harder to monitor and optimise.

“The challenge is that complexity itself creates inefficiencies. The more environments organisations operate across, the harder it becomes to maintain visibility into what resources are being used, whether they are delivering value and where opportunities exist to reduce unnecessary spend,” Andersen said.

The survey also points to a more formal approach to cloud oversight. Flexera found that 71% of organisations now have a Cloud Centre of Excellence, while 63% have established dedicated FinOps teams.

Azul has published a new whitepaper warning organisations that running Oracle Java in production without a paid subscription carries serious financial and compliance risks.

The whitepaper, titled “Oracle Java Uncovered: What Free Java Users Need to Know Now,” comes as 73% of organisations report having been audited in the past three years.

Under Oracle’s Java SE Universal Subscription model, licensing costs are calculated based on total employee count, regardless of actual Java usage across the organisation.

A single unlicensed instance can trigger a demand to license the entire organisation, often accompanied by multi-year back-usage fees charged at list price.

That exposure extends beyond current employees, with audits potentially requiring organisations to license every contractor and part-time worker in addition to full-time staff.

The whitepaper outlines four paths forward for organisations currently running Oracle Java without a paid license, giving decision-makers a structured framework for evaluating their options.

Azul also cautions that switching to unsupported OpenJDK is not a straightforward fix, as it may not protect against back-usage fees tied to historical downloads of Oracle Java.

Unsupported OpenJDK also introduces its own risks, including patch stability concerns and regulatory exposure under compliance frameworks such as PCI-DSS 4.0 and DORA.

For organisations considering migration, Azul notes that OpenJDK is fully interchangeable with Oracle Java and requires no code changes or re-architecture to implement.

Commercially supported OpenJDK providers offer migration methodology, automated tooling, and expertise designed to reduce the time and resources required for transition.

Azul describes itself as the trusted leader in enterprise Java for the AI and cloud-first world, with its platform powering mission-critical systems for 36% of the Fortune 100.

The company also counts 50% of the Forbes Top Ten World’s Most Valuable Brands and the world’s top 10 financial trading companies among its customers.

The full whitepaper is available for download at azul.com/oracle-java-uncovered for organisations seeking to assess their current exposure and evaluate next steps.

The UK’s Competition and Markets Authority (CMA) is taking a closer look at Microsoft’s business software empire, launching a strategic market status investigation into the company’s ecosystem.

The probe, which is the fourth since the UK’s digital markets competition regime came into force last year, will determine whether Microsoft should be designated as having strategic market status, which would allow the CMA to implement interventions to support competition.

In March, the CMA announced that the investigation was coming. The regulator was concerned that Microsoft’s software licensing practices were reducing competition in the cloud.

In the most recent announcement, the CMA said it had “heard that UK customers may not always be able to effectively combine software from Microsoft with that of other providers, limiting their ability to get access to the best products at the most competitive prices.”

Microsoft is no stranger to regulatory friction. In 2025, it described calls from AWS and Google for the UK competition regulator to “intervene and constrain the price” it charges customers to run wares on those rivals’ cloud platforms as “extraordinary and unprecedented.”

Two year prior, Google branded Microsoft’s cloud software licensing a “tax” paid by customers as a penalty for not running Microsoft software on Azure infrastructure. It claims that Microsoft charges up to four times more, for example, to run Windows Server on GCP. AWS has previously moaned about this too.

As well as assessing whether Microsoft is using its position to limit customer choice, the CMA investigation “includes looking at how AI competitors are able to integrate with Microsoft’s business software, giving customers access to AI software across suppliers to best suit their needs.”

Microsoft is pushing Copilot AI into as many Microsoft 365 subscriptions as it can, even creating a new tier, E7, aimed specifically at AI services.

In a statement, Nicky Stewart, senior advisor to the Open Cloud Coalition – a trade association Microsoft previously dismissed as a Google lobby group – said:

“This investigation needs to be both rapid and conclusive. It must address Microsoft’s unfair licensing practices once and for all, giving the UK cloud market a level playing field and the confidence to innovate and invest for the long term.”

Readers should not expect results anytime soon. It took 21 months for the CMA to publish the results of an investigation into the UK cloud services market, in which it said Microsoft and AWS were using their dominance to harm UK cloud customers. It claimed Microsoft, for example, could have charged UK enterprise customers £500 million more annually to run its wares in AWS and Google clouds than they’d have paid to run them in Azure.

A key concern from that investigation – whether Microsoft’s software licensing practices were reducing competition in cloud services – has informed this one.

This latest inquiry must be completed within nine months, and a decision on designating Microsoft with SMS is scheduled to be reached by February 2027.

For its part, a Microsoft spokesperson said “We are committed to working quickly and constructively with the CMA to facilitate its review of the business software market.”

The investigation will be wide-ranging, encompassing productivity applications, operating systems, databases, and security software.

Sarah Cardell, Chief Executive of the CMA, said, “Our aim is to understand how these markets are developing, Microsoft’s position within them and to consider what, if any, targeted action may be needed to ensure UK organisations can benefit from choice, innovation and competitive prices.”

Authorities in the US, Europe, Brazil, South Africa and Japan are also closely monitoring Microsoft’s licensing policies.

A UK Competition Appeals Tribunal (CAT) has dismissed Microsoft’s objections to a collective action lawsuit brought by UK-based cloud licensees, clearing the way for trial.

The case seeks compensation for approximately 59,000 businesses and organisations over Microsoft’s pricing of Windows Server on Azure versus competing cloud platforms including AWS and Google Cloud – allegations that Microsoft charged less for the software on its own platform than on rivals’. If Microsoft loses, it could face liability of up to £2 billion (c $2.7 billion).

The CAT granted a Collective Proceedings Order (CPO) on an opt-out basis, and said in its judgement that the claim “comfortably passes” the reasonable prospect of success threshold. The CPO – expected to be published within weeks – will set a deadline for businesses to opt out, and may include directions for when hearings begin.

Microsoft’s protestations concerned funding and the merits of the case.

Lead claimant Dr Maria Luisa Stasi called the ruling “an important moment for thousands of organisations impacted by Microsoft’s conduct.”

She added: “For years, Microsoft’s practices have had real financial impact on both public and private organisations. I’m now looking forward to preparing for trial and getting their money back on their behalf.”

A spokesperson for Microsoft said: “We will pursue an appeal of the Tribunal’s decision because it failed to follow recent precedent from the Supreme Court on class action certifications. We also dispute the underlying allegations by the class representative, and today’s decision makes no final determination on those claims.”

The case, filed in December 2024, is one of several legal headaches for Microsoft in the UK. The company is separately appealing a CAT ruling over secondhand software sales in a claim brought by reseller ValueLicensing.

Jonathan Horley, boss at ValueLicensing, said of the class action case heading to trial: “However it pans out, it is very good that MS are being held to account over their strategic move to a subscription model.

“Over the last 15 years, in both the desktop and datacenter environments, VL believes that Microsoft has abused its dominant position to achieve that aim. I believe the Stasi and Wolfson claims are manifestations of that.”

Cloud provider Civo also welcomed the development. CEO Mark Boost said: “Ensuring a level playing field for all providers is essential to fostering innovation, expanding choice, and delivering the best outcomes for customers.”

Microsoft’s alleged licensing practices have drawn scrutiny across Europe and further afield – in 2024, the company settled with EU cloud vendor group CISPE with a payout and commitments to change its practices. CISPE had no comment to make on this latest development. In the same year, Google filed a complaint with the European Commission’s anti-trust team over the matter.

The FTC is examining if Microsoft’s cloud clout crosses the line, and authorities in Japan are investigating if the vendor has violated anti-monopoly laws.

Google and AWS have not commented on the CAT licensing ruling, which sends the case to trial.