Developers love GitHub Copilot. Probably, even more than ChatGPT. It has been gaining traction ever since its launch despite several copyright claims. Satya Nadella describes it as a tool that translates and writes code in a “fairly magical way“. Reports show that it boosts developers’ productivity by 55%.

Despite the love from developers, the AI code generation tool might not be as beneficial for Microsoft. Recent reports from The Wall Street Journal have raised concerns about GitHub Copilot’s financial performance.

It was revealed that, on an average, GitHub was losing more than $20 per user each month earlier in 2023. Some users were even costing GitHub as much as $80 a month. With approximately 1.5 million users, this translates to a substantial monthly loss for GitHub.

In response to these reports, Microsoft’s VP of product Mario Rodriguez challenged the claims of financial losses. He stated that GitHub Copilot is thriving and generating revenue at an annual rate of $100 million. Microsoft claims that GitHub Copilot’s financial performance is healthy and it is not running at a loss.

Despite the financial discussions, Microsoft has seen a significant increase in the number of paid users for GitHub Copilot. According to Nadella, the paying customer base for Copilot software grew by 40% in the September quarter. With over 1 million paid Copilot users in more than 37,000 organisations, the service has gained traction internationally.

Though he did not specify the revenue from GitHub Copilot, Microsoft CFO Amy Hood said that “higher-than-expected AI consumption contributed to revenue growth in Azure”.

Would the costs increase?

Currently, GitHub Copilot offers two subscription plans – the Individual Plan priced at $10 per month or $100 per year, and the Business Plan priced at $19 per user per month. These plans were designed to make GitHub Copilot accessible to both individual developers and businesses. However, the pricing strategy has come under scrutiny due to its impact on Microsoft’s financials.

The reason is that the code generation platform works on OpenAI’s Codex, which is built out of GPT-3.5, and the later version GPT-4. These models require a high amount of compute, and Microsoft is extensively looking to cut costs. For example, even if a person pays $10 per month, the amount of code they generate is still not counted, and could cost a lot more than that. Possibly, Microsoft actually burns a lot more compute than it gets paid for even now.

That is one of the reasons why the company has also been testing out smaller models like Meta’s Code Llama for code generation.

Nat Friedman, former CEO of GitHub, has also completely denied the claims that it was actually costing Microsoft money. He said, the actual cost was “less than the price”.

It does not seem like the prices would increase anytime soon. Though, the GitHub Universe 2023 is just around the corner. There might be new updates to the software, or probably to the pricing as well (hopefully not). 

But is there room for loss in the future?

In March, we reported that Indian IT prefers IBM’s CodeNet more than GitHub Copilot. The reason simply being that it is open source. IBM had also boasted the capabilities and user base of its Wisdom code generation platforms. Though it is miniscule compared to GitHub Copilot, Indian IT was adopting it rapidly. 

Companies like Replit have been changing the scenario of code generation globally. “A lot of people in India code using their phones… In college classrooms under their tables, students are coding on their phones to practise what they’re learning in real time,” Anshul Bhide, BizOps, India head at Replit, told AIM. 

Meanwhile in August, Replit announced changes to its pricing plans after upgrading its capabilities and easier deployment of code. 

Google has also introduced its Codey, auto code generation model on Vertex AI, which it obviously claims is better than other models. The same is the case with Amazon’s CodeWhisperer. Though the pricing for all of these models comes around the same, individual developers, more than enterprise ones, still prefer GitHub Copilot for its accuracy, thanks to OpenAI’s Codex.

Also, Zoho is also planning to come up with a rival to GitHub Copilot. 

Now, the only challenge that GitHub Copilot faces when it comes to the future is the rise of competitors. The question whether it is working for Microsoft or not is not up for debate at the moment, but alternatives are increasingly raising the bar.