Claude Code reads AGENTS.md only when telemetry is on
A developer discovered that Claude Code's new AGENTS.md support is gated behind a remote feature flag that requires telemetry to be enabled. Disabling telemetry or nonessential traffic prevents the tool from reading local project instructions, creating a privacy-versus-functionality conflict.
Why it matters
This highlights growing concerns over 'phone-home' requirements in developer tools where local configuration files are made dependent on cloud-based feature flags.
Claude Code 2.1.277 added AGENTS.md support, but the loader sits behind a remote feature flag. With telemetry or nonessential traffic turned off, a local AGENTS.md is skipped without a warning. This is what I measured and the one-line CLAUDE.md I use instead.
Claude Code 2.1.277 announced support for AGENTS.md . In a project with no CLAUDE.md , it is supposed to read AGENTS.md instead. I keep telemetry off in my shell, and in my repos the file never loaded. Issue #95690 explains why, and I added my own measurements to it. This post collects them in one place.
The loader ships as a built-in plugin called agents-md . Its registration in the 2.1.280 bundle looks like this:
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