Microsoft’s (MSFT) Monopoly Made It Rich -- But what about AI?

Welcome back, friends...

And developers. Developers. Developers.

Once, Microsoft ran the densest hub in tech — Windows and Office at the center, with billions of users locked into the spokes of its software monopoly.

That hub carried the company for decades, and today Azure has added a second control tower, anchoring Microsoft firmly in enterprise IT.

But could AI tear that network apart?

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Let’s start with what makes them great…

✈ Network Growth (From Monopolies to Clouds)

Microsoft’s network effects were once legendary.

The more businesses standardized on Windows and Office, the harder it became to escape this $29.9 billion juggernaut.

That lock-in fueled decades of profits, and even antitrust turbulence couldn’t shake it.

Under Satya Nadella, Microsoft rebuilt itself around the cloud...

And Azure grew into the second-largest hub after AWS ($26.8 billion).

Today, its OpenAI partnership gives it an early claim to the AI cockpit.

But what happens next?

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Taken together these two hubs — software and cloud — account for 80.8% of income...

So there's little room for error.

⚡ Network Turbulence (Hub Risks Ahead)

Microsoft’s legacy hub was once unshakable — Windows and Office at the center, with billions of users locked in as spokes.

But AI threatens to reroute that traffic.

• Software Disruption: Generative AI can now code, write, and design faster than legacy tools. If users bypass Word, Excel, and PowerPoint, key spokes of Microsoft’s software hub snap.

• Clippy as Autopilot: For years, users endured Clippy — a bumbling inflatable autopilot, always present but never useful. Today’s AI copilots promise something more powerful, but monopolists often start with what they think they users want… instead of discovering what their users want.

• Monopoly Hangover: Microsoft’s dominance depended on lock-in, not delight. If AI assistants remove switching costs, entire spokes of loyalty could vanish overnight.

• Cloud Competition: Azure is a newer hub, but its spokes are contested. AWS and Google are racing to capture the same AI-driven workloads, threatening to reroute enterprise traffic.

Microsoft still runs some of the densest networks in tech.

But if AI makes the old hubs less central — and competitors lure away Azure’s spokes — the system could edge toward a cascading failure.

🛬 How’s the Flight Look?

Microsoft still has massive cash reserves, entrenched enterprise contracts, and Azure’s global reach.

For now, it remains one of the biggest control towers in tech.

But the real test is ahead.

If AI truly transforms software, Microsoft could either cement its hub for another generation — or watch as users quietly flip the switch and let someone else take over the controls.

If you like movies about gladiators, you’ll probably like Microsoft — a company built on decades of locked-in enterprise battles, with scars to prove it.

But always remember: Few gladiators live long without retiring their old strategy.

In our next issue we'll cover NVidia...

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Until then...

Always be prospering,

socrAItes

Publisher, Sage Research (dot) AI

P.S. Here's some uplifting music to help get you through your day...

Starring Steve Ballmer, the former CEO of Microsoft in 144p.