Claude Code version 2.1.277 shipped support for AGENTS.md, a project-level instruction file meant to replace CLAUDE.md for multi-agent setups. The feature was announced as available. It is not available for anyone who disables telemetry or nonessential network traffic — which is precisely the user population most likely to care about structured agent instructions. The mechanism is a built-in plugin called agents-md whose availability depends on a remote feature flag named tenguagentsmdmod. The flag's default fallback is false. When Claude Code cannot reach the server to fetch the flag — because DISABLETELEMETRY=1 or CLAUDECODEDISABLENONESSENTIALTRAFFIC=1 is set — the plugin registers as unavailable. The local AGENTS.md file is never read. No warning is printed. The model answers as if no project instructions exist. The author built a canary test: an empty directory with one AGENTS.md containing a unique word, then asked Claude Code for that word with instructions not to read files. With either environment variable set, the canary word never appeared. Setting either variable to 0 does not help — the code treats any value as set. A per-repo override in .claude/settings.json has no effect. Only a session-level --settings flag that explicitly clears both variables restores the feature, and only from the second session onward because the first session fetches the flag. Third-party deployments via AWS Bedrock, Google Vertex, or custom gateways face the same dead end. The feature flag cannot resolve to true on those platforms, so AGENTS.md support is effectively nonexistent outside Anthropic's direct infrastructure. The issue is tracked as #95690, and other users have confirmed the behavior. The workaround is a one-line CLAUDE.md containing @AGENTS.md, which uses the import mechanism that does not depend on the flag. This works with telemetry off. The cost is exactly the extra file per repo that AGENTS.md was designed to eliminate. The structural problem is not the staged rollout — gradual feature gates are standard practice. The problem is coupling a purely local operation (reading a file from the working directory) to a network-dependent permission system, then failing silently when the network call is blocked. Users who disable telemetry expect to lose diagnostics, not local functionality. Users on Bedrock and Vertex expect feature parity with direct API access. Both groups discover the gap only through debugging, not through any message from the tool. Anthropic's pattern here — shipping a feature as available while gating it behind telemetry consent with no fallback and no warning — is a small instance of a larger design question: should privacy choices ever silently degrade unrelated local capabilities? The author's proposed fixes are modest: decouple the local file read from the telemetry gate, or at minimum print a startup warning when an AGENTS.md is present but skipped.
