Claude Code reads AGENTS.md only when telemetry is on [fixed] (blog.szypowi.cz)

Claude Code 2.1.277 recently introduced support for reading AGENTS.md files, intended to serve as project instructions when no CLAUDE.md is present. However, a notable limitation has emerged: the loading of AGENTS.md relies on enabling telemetry, which can be turned off for privacy reasons. Users have reported that with telemetry disabled, Claude Code fails to read the AGENTS.md file even though it is located in the working directory, leading to confusion and frustration. The plugin's operation is governed by a remote feature flag that determines whether the AGENTS.md file is accessible, resulting in silent failures when the flag cannot be fetched. This situation is significant for the AI/ML community as it highlights potential user experiences that conflict with privacy settings. Developers and teams that prioritize data protection may unwittingly lose an essential feature without clear communication from the system. The workaround solutions currently involve creating additional configuration files (like CLAUDE.md) that bypass the telemetry requirement, but these solutions add unnecessary complexity. Critics are advocating for a more user-friendly approach, such as altering the design so local file access is independent of telemetry settings and ensuring that users are notified when features are disabled.