Microsoft turns 50: Will AI make it even more powerful?

Whether in offices, classrooms, or even agriculture, Microsoft technologies are omnipresent today. With its Windows operating system, the company transformed computing, making personal computers accessible to the masses.

Its Office suite became synonymous with modern office work, and during the COVID-19 pandemic, Microsoft Teams became a lifeline for businesses and schools worldwide. Today, the communications platform has over 320 million daily users, turning remote work from an exception into the norm.

As Microsoft, headquartered in Redmond, United States, is celebrating its 50th anniversary this Friday (April 4), the company stands at a pivotal moment this year.

With its dominance in industries like cloud computing, operating systems, and development tools, will the tech giant also lead the transition into the artificial intelligence (AI) era — or is its enormous influence a cause for concern?

From garage to global leader

It all began in 1975 in a small garage in Albuquerque, New Mexico. Two college friends and programmers, Bill Gates (19) and Paul Allen (22), had a simple yet groundbreaking vision: making computers accessible to everyone.

A key milestone for the young founders was their 1980 partnership with IBM, which established Microsoft's MS-DOS as the standard operating system in the PC industry. The launch of Windows a few years later laid the foundation for Microsoft's future dominance in the software market.

Over the past five decades, Microsoft has continuously adapted to technological changes and expanded its business into new areas. It's no longer just a software company but a global technology empire with a presence in almost every sector.

The numbers speak for themselves: As of March 2025, Microsoft is the world’s third most valuable company, behind iPhone maker Apple and chip manufacturer NVIDIA. 

The future lies in AI

Despite its immense market power, Microsoft finds itself at the dawn of a new era defined by two letters: AI. The company is investing billions in research, building vast data centers worldwide, and developing its own AI chips.

Driving the transformation is CEO Satya Nadella, who took the helm in 2014 and made two strategic decisions that have reshaped Microsoft's future.

First, he shifted the company’s focus to cloud computing, revolutionizing its business model and revenue streams. Second, he positioned AI as the core of Microsoft's long-term strategy, recognizing early on the immense potential of this technology.

Microsoft’s AI-powered tools, such as Copilot, already handle routine tasks, draft emails, analyze data, and generate creative content. The company aims to further shape how people work, communicate, and innovate.

While Microsoft markets AI as a productivity booster, critics warn of massive job losses due to automation. Ethical concerns also loom large, ranging from data privacy risks to AI-generated misinformation.

Antonio Krüger, CEO of the German Research Center for Artificial Intelligence (DFKI) — a public-private partnership — says AI is beginning to "directly influence value creation in companies."

"Major tech firms like Microsoft are striving to strengthen their foothold in this area," Krüger told DW, expanding the transformation "far beyond traditional office processes, and significantly impacting core industrial and economic sectors across Europe."

Can Microsoft be stopped?

For many businesses and governments, Microsoft has become nearly indispensable. In Germany alone, 96% of public authorities use the company's software, and 69% rely on its data centers, according to global data provider Statista.

Companies depend on the company's cloud infrastructure, security services, and AI-driven tools, while government agencies store sensitive data in Microsoft's data centers and use its software for administrative tasks.

At least 1.4 billion PCs and laptops worldwide run on Windows, internal data provided by Microsoft show.

But this deep integration comes with a catch — for many, switching away from Microsoft is almost impossible.

Experts like Krüger warn of a so-called lock-in effect, which means that once an organization has fully adopted Microsoft's ecosystem, transitioning to another platform becomes extremely difficult and costly. This dependence reinforces Microsoft's market dominance, making it nearly impossible for competitors to challenge the company effectively.

For governments, the question arises: Should a single company wield so much control over critical digital infrastructure?

While policymakers, especially in the European Union, advocate for stricter regulation or greater diversification of technology providers to reduce reliance on Microsoft, truly viable alternatives remain scarce.

But Krüger believes that rather than focusing on regulation, the EU should start building a European AI software champion. "We are fundamentally competitive in technology, but if we don't develop large-scale AI models in Europe, we won't play a significant role in the global tech landscape," he said.

Microsoft in an AI-dominated world

Microsoft's global expansion shows no signs of slowing down, as it strives to further enhance its AI capabilities in future. The company is planning to integrate its models more deeply into everyday applications, while at the same time strengthening its bread-and-butter cloud business.

Pushing the tech frontier even further, the company, in February, introduced its newest Majorana 1 chip — the world’s first quantum chip that Microsoft claims will "realize quantum computers capable of solving meaningful, industrial-scale problems in years, not decades."

Edited by: Uwe Hessler