June 10 (Reuters) - Microsoft ( MSFT ) is limiting

employees' use of Anthropic's Claude Fable 5 because of the AI

startup's new data retention requirements, The Verge reported on

Wednesday, citing sources.

Anthropic on Tuesday said it is rolling out Claude Fable 5,

a public version of its Mythos AI model, with guardrails barring

its use in risky areas such as cybersecurity.

Claude Fable 5 is the most powerful model Anthropic has made

available for wider use, with the company citing its performance

in software engineering and analytics.

Microsoft ( MSFT ) has told employees that its legal teams are

evaluating changes to Anthropic's data retention requirements,

according to the report.

The concerns center on customer data and confidential

information, and it is not yet clear whether Microsoft's ( MSFT ) legal

teams will clear Claude Fable 5 for internal use, the report

said.

Under Anthropic's data retention policy for Mythos-class

models, prompts submitted and outputs generated are retained for

30 days for trust and safety purposes on every platform where

the models are offered.

Anthropic retains inputs and outputs for up to two years if

they are flagged by its trust and safety classifiers as

violating its usage policy.

Microsoft ( MSFT ) and Anthropic did not immediately respond to

Reuters requests for comment.

Anthropic last week said it had confidentially filed for a

U.S. initial public offering but did not disclose the size or

terms of the offering.

It last raised $65 billion at a post-money valuation of $965

billion in late May, putting it ahead of rival OpenAI.