Microsoft paid $7.5 billion for GitHub in 2018 and spent years building it into the dominant platform for software developers. Now, repeated outages, a fresh security incident, and rising competition from newer AI tools are eroding that advantage at a critical moment.
Early Wednesday, GitHub disclosed that an employee's device was compromised in a security incident. The attacker was able to obtain about 3,800 of GitHub's own code libraries. The breach came on top of months of reliability problems that have affected companies as large as Cisco, according to CNBC.
Mitchell Hashimoto, co-founder of HashiCorp, which IBM acquired last year, wrote in a blog post last month that GitHub "is no longer a place for serious work if it just blocks you out for hours per day, every day."
Those frustrations are pushing some companies to look elsewhere. GitLab is one option. Amazon and Atlassian also offer competing services. Jyoti Bansal, CEO of software delivery startup Harness, said his company has even explored launching its own code storage feature. "We are hearing real concerns from enterprise customers, and more of them are actively looking at alternatives," Bansal said.
The timing is damaging for Microsoft CEO Satya Nadella. GitHub's six times growth in developer count since the acquisition gave Microsoft what analysts call a distinct home-court advantage with coders entering the AI era. That advantage was supposed to translate into a commanding position in AI-assisted coding, sometimes called vibe coding, as agentic AI tools allowed developers to accelerate their output dramatically.
Instead, newer tools like Cursor and Anthropic's Claude Code have gained ground fast. Microsoft's Copilot technology has struggled to resonate with users compared to what internet rivals have built. Microsoft stock is down 13% this year, trailing all of its megacap peers.
Nadella said in October that GitHub was "growing at the fastest rate in its history, adding a developer every second," reaching a total of 180 million developers. The platform remains ahead of GitLab in the devops market, according to client spending data from startup Ramp. And Stack Overflow's 2025 developer survey listed GitHub as the most popular tool for collaborative work management and code documentation.
But the outage and security problems arrive just as the generative AI boom, now in its fourth year, is producing clear winners and losers. Developers have options they did not have two years ago, and some are using them. For Nadella, whose 12-year tenure at Microsoft was defined by a successful pivot to cloud computing, the AI era is proving harder to navigate.
