IT Essentials: Microsoft – too big to fail?

Is the world so dependent on Microsoft that it would need bailing out in the event of a catastrophe?

The tech news story of the last few days has to be the widespread exploitation by state-sponsored and criminal hackers of a vulnerability in Microsoft SharePoint.

Breaches have reported in numerous organisations around the world, including the US Nuclear Weapons Agency. Nothing to worry about there then.

It's not the first time that holes in Microsoft's enterprise software have led the news. In 2023, Senator Ron Wyden accused Microsoft of negligence after it was discovered that an Azure glitch had allowed Chinese hackers to monitor email accounts for months at 25 organisations, including government agencies in the US and Western Europe.

Following that debacle, CEO Satya Nadella promised to make security top priority. But that is easier said than done. Microsoft's software is ubiquitous thanks to its policy of acquire, integrate and bundle. A hugely successful business strategy, it also means that an attack on Outlook, for example, can move sideways into SharePoint and on from there.

If we needed reminding, the true scale of Microsoft's presence became apparent this time last year when a faulty CrowdStrike update sent Windows machines in stations, airports and businesses all over the world (with the notable exception of China) spiralling to the Blue Screen of Death.

On this and other occasions the same question has been raised, using a term that emerged after banks were bailed in 2008: Is Microsoft too big to fail? Are we so dependent on it services that it would need bailing out like the banks in the event of a catastrophe?

Nope, it's not even in the same ballpark, say calming voices. Depending on a single company for global infrastructure may be unwise, but Microsoft, unlike banks, does not hold insured deposits nor interdependent debt that could tank the economy. Competitors such as Google or Amazon could likely fill the void avoiding the cascade of failures seen in the financial crisis.

On the other hand...

Two recent articles caught our eye at Computing that suggest the dependence of the global economy (particularly the US) on big tech may be its undoing. One, a lengthy piece by blogger Ed Zitron, notes that Nvidia has become the most valuable company in the world thanks largely to investments from Microsoft, Amazon and Google - none of which have made any profit from AI. Far from it: AI investments are losing money hand over fist. If Nvidia were to stop selling more silicon every quarter, what then?

The other, an analysis by Reuters finance editor Geoffrey Goldfarb, finds that tech giants are pumping money into data centre infrastructure 13 times faster than a decade ago as they chase the AGI dream. Worryingly, the article features a spiking Nasdaq trace that looks a lot like the run up to the dot-com bubble.

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