Microsoft’s role as both the maker of Windows and an increasingly powerful security software vendor is reshaping the economics, engineering and trust model of the MSP security market — and the implications are now impossible for partners to ignore.
The debate was center stage at a recent industry roundtable where security executives laid out the realities that managed service providers (MSPs) and independent security vendors face when a single platform owner owns the operating system, ships bundled endpoint defenses and then layers premium security SKUs on top of that base. WatchGuard Field CTO Adam Winston described the situation as a “squeeze play”: Microsoft’s ubiquity forces MSPs to integrate with Microsoft Defender and Azure while also competing against Microsoft’s growing foothold in endpoint security.
That dynamic is not abstract. IDC’s market-share research shows Microsoft Defender’s share of the worldwide modern endpoint security market climbed from roughly 25.8 percent in 2023 to 28.6 percent in 2024 — putting Microsoft ahead of long-established EDR vendors and materially shifting the competitive baseline for MSPs and security vendors alike.
At the same time, Microsoft has marshalled an enormous internal security effort — the Secure Future Initiative — and reports the equivalent of 34,000 full-time engineers focused on security tasks. That scale matters when the company invests to improve telemetry, detection, cloud scale and integration across Windows, Azure and Microsoft 365.
Ars Technica, The Verge and other independent outlets reported on the initiative and its implications, noting that while Microsoft is offering alternatives to kernel-mode integration, it has not definitively barred kernel access — at least not yet. That uncertainty is a core tension for independent vendors who rely on kernel-level hooks for prevention and anti-tampering.
For MSPs, the consequence is straightforward: a cheaper path for customers to obtain deeper Microsoft-native security functionality reduces incremental budget available to buy third-party tools — especially for SMB customers where cost sensitivity is high.
Security vendors should consider:
MSPs and vendors should monitor evolving compliance expectations and be ready to advise customers on auditability, contractual protections and third-party assurance for critical security controls.
At the same time, the CrowdStrike outage and the kernel-access debate are reminders that platform concentration carries systemic risk. Independent vendors and MSPs are right to press for openness, robust testing, and clear rollback assurances. The industry is moving toward safer platform mechanisms — including user-mode alternatives and improved recovery tooling — but those technical choices will not automatically level the playing field. They will instead reshape the types of advantages each vendor can reasonably claim.
For MSPs, the path forward is dual: embrace what Microsoft does well — telemetry, identity, scale and competitive SMB pricing — but maintain multivendor resilience and operational discipline. For third-party vendors, the imperative is clear: integrate where necessary, differentiate where you can, and make your operational safety and testing practices a marketable advantage.
The Microsoft-led evolution of endpoint architecture, licensing and platform policy is underway. MSPs who treat it as an opportunity to modernize processes, codify multivendor resilience and help customers buy security intentionally — not by default — will be best positioned when the next platform-level event tests that resilience again.
Conclusion
Microsoft’s rise in endpoint market share, its massive security investments, and the post-CrowdStrike technical pivot toward user-mode security fundamentally change the MSP security calculus. The choice for MSPs is neither to blindly resist Microsoft nor to accept it as a monopoly inevitability; instead, the sustainable strategy is the hard, practical work of architecture, testing, multi-layered defenses and commercial agility. Those MSPs and vendors that do the heavy lifting — integrating Microsoft productively while preserving independent controls and recovery capabilities — will convert platform concentration into an operational advantage rather than an existential risk.
Source: CRN Magazine Security Execs: Microsoft’s Position As OS, Security Software Provider Looms Over MSP Landscape
Background
The debate was center stage at a recent industry roundtable where security executives laid out the realities that managed service providers (MSPs) and independent security vendors face when a single platform owner owns the operating system, ships bundled endpoint defenses and then layers premium security SKUs on top of that base. WatchGuard Field CTO Adam Winston described the situation as a “squeeze play”: Microsoft’s ubiquity forces MSPs to integrate with Microsoft Defender and Azure while also competing against Microsoft’s growing foothold in endpoint security. That dynamic is not abstract. IDC’s market-share research shows Microsoft Defender’s share of the worldwide modern endpoint security market climbed from roughly 25.8 percent in 2023 to 28.6 percent in 2024 — putting Microsoft ahead of long-established EDR vendors and materially shifting the competitive baseline for MSPs and security vendors alike.
At the same time, Microsoft has marshalled an enormous internal security effort — the Secure Future Initiative — and reports the equivalent of 34,000 full-time engineers focused on security tasks. That scale matters when the company invests to improve telemetry, detection, cloud scale and integration across Windows, Azure and Microsoft 365.
Why the Microsoft dual-role matters to MSPs
The practical squeeze: platform owner versus best-of-breed
MSPs operate in a pragmatic world: customers run Windows, and Microsoft ships a baseline of security — from basic Defender Antivirus that ships with Windows to higher-tier Defender for Endpoint and Defender for Office 365 — often bundled or included in Microsoft 365 licensing. The result is a three-part pressure on MSPs:- Bundled baseline security reduces purchase friction for Microsoft’s offering and raises the bar for third-party vendors to justify incremental spend.
- Microsoft controls OS-level extension points that third-party security products rely on, including kernel-mode APIs and drivers — a control vector that can materially affect architecture and competitive parity.
- Microsoft’s investment scale (both engineering and telemetry) creates a feature and scale advantage that MSPs must integrate with rather than ignore.
Integration is mandatory — not optional
Several MSP-focused vendors described how integration is already non-negotiable. WatchGuard openly states it had to integrate its tooling with Microsoft Defender and Azure because “Microsoft is so ubiquitous” in customers’ environments. For MSPs that want multitenant management and automated workflows, deeper integration with Microsoft’s telemetry and management surfaces is effectively a requirement.The technical flashpoint: kernel access, resiliency and the CrowdStrike wake-up call
The incident that changed the conversation
The July 2024 global outage caused by a flawed CrowdStrike Falcon update — which impacted an estimated 8.5 million Windows endpoints and caused cascading disruptions across airlines, broadcasters and healthcare — crystallized the platform-risk argument. That outage triggered urgent discussions about how deeply third-party endpoint drivers should be allowed to integrate with Windows’ kernel and boot process. Reuters, AP and multiple outlets documented the scale and societal impact of the outage.Microsoft’s technical response and the user-mode alternative
Microsoft has publicly signaled a technical path: build platform capabilities so security solutions can operate outside kernel mode, reducing the chance that a third-party update crashes the OS early in boot. Microsoft’s Windows security leadership described a private preview for partners and a broader Windows Resiliency Initiative aimed at enabling user-mode security capabilities, faster recovery tools, and safer update/testing frameworks for security vendors. Those moves are explicitly framed as resiliency engineering derived from the CrowdStrike incident.Ars Technica, The Verge and other independent outlets reported on the initiative and its implications, noting that while Microsoft is offering alternatives to kernel-mode integration, it has not definitively barred kernel access — at least not yet. That uncertainty is a core tension for independent vendors who rely on kernel-level hooks for prevention and anti-tampering.
Why kernel-mode access matters — and why it’s contentious
Kernel-mode access gives EDR and AV vendors the ability to observe and intercede at the deepest level of the OS; that capability is a double-edged sword:- Benefit: Kernel access can provide early detection and stronger prevention against memory- or boot-level threats and tampering. It’s often the place vendors claim they must operate to prevent advanced evasion.
- Risk: Bugs or poorly tested updates running in kernel-mode early in the boot sequence can make recovery difficult, and a single erroneous update can cause systemic failures — as CrowdStrike’s incident demonstrated.
Market shifts and licensing moves: what Microsoft has introduced for SMBs and MSPs
New Defender and Purview add-ons aimed at SMBs
Microsoft has made tactical product and pricing moves that affect MSP go-to-market strategy. In 2025 Microsoft announced new security and compliance add-ons for Microsoft 365 Business Premium aimed at small and midsize businesses: the Microsoft Defender Suite for Business Premium and the Microsoft Purview Suite for Business Premium, each priced at $10 per user per month — with a combined Defender + Purview package offered at a lower combined price. Those SKUs lower the threshold for SMBs to access enterprise-grade detection, identity protection, DLP, insider risk and investigation capabilities.For MSPs, the consequence is straightforward: a cheaper path for customers to obtain deeper Microsoft-native security functionality reduces incremental budget available to buy third-party tools — especially for SMB customers where cost sensitivity is high.
Market-share reality: Defender’s momentum
IDC’s “Worldwide Modern Endpoint Security Market Shares, 2024” report and Microsoft’s public summary of that data show Microsoft increasing its share of the modern endpoint market into the high twenties percentage range — an important data point because market share affects partner mindshare, procurement defaults and long-term consolidation trends. CRN and Microsoft have both cited the IDC numbers.The positives: what Microsoft brings to MSPs
Scale, telemetry and integrated capabilities
Microsoft’s scale is a double-edged competitive advantage. On the positive side, Microsoft’s investment delivers several operational and technical advantages:- Massive telemetry and cloud scale for threat detection and hunting.
- Tight identity and device integration across Entra ID, Defender, Intune and Purview.
- New multitenant management surfaces such as Microsoft 365 Lighthouse and improvements to partner experiences that make managing Microsoft-native security easier for MSPs.
Lower barrier for smaller customers
The new Defender and Purview add-ons for Business Premium were explicitly designed to give SMBs enterprise-level security capabilities at a price point they can absorb. That’s good for MSPs focused on SMB markets: it gives them another, Microsoft-certified SKU to sell that includes identity protection, endpoint EDR, email protection and DLP — and importantly, it simplifies licensing conversations with budget-limited customers.The risks: competition, architecture and concentration
Competitive pressure and potential for platform bias
The core risk is structural: when the OS owner also competes in endpoint markets, the vendor has both the platform levers and the economic incentive to prioritize its own experiences. That creates:- Market pressure on ISVs to replicate features or accept a smaller share of net-new procurements.
- Regulatory and antitrust scrutiny in some jurisdictions because platform control can translate into competitive advantage. Independent vendors fear platform-level changes — even well-intended resiliency efforts — could tilt the market.
Operational complexity and literacy gaps
WatchGuard’s Adam Winston emphasized a second, often-overlooked problem: security product literacy and configuration complexity. Good Microsoft security products are not always well-configured by default in real-world environments, and MSPs reported large “security deltas” caused by mismatched versions, misconfiguration, or incomplete knowledge of Microsoft’s many modules. That increases alert volumes and operational toil.Concentration risk and single points of failure
The CrowdStrike outage illuminated concentration risk: when a single vendor’s update can cascade into widescale outages, customers and partners face systemic exposure. Consolidation to a few large vendors — whether Microsoft, CrowdStrike, or others — raises the stakes for testing, deployment governance, and multi-vendor resiliency planning.Strategic checklist for MSPs: how to respond, pragmatically
The following are practical steps MSPs should evaluate now. They’re tactical, vendor-agnostic and built to help partners navigate the Microsoft-dominant reality.- Map the estate: inventory every endpoint, identity, mailflow and cloud app that is Microsoft-managed or Microsoft-protected. Prioritize gaps where Microsoft baseline tooling is present but not fully configured.
- Reassess licensing levers: model margins across scenarios where the customer adopts Microsoft Defender/Purview add-ons vs third-party subscriptions. Make the Microsoft SKU a competitive tool rather than a surprise.
- Harden update testing: implement staged deployment rings and rollback/runbook automation for any kernel-level or driver updates you manage; demand the same from vendor partners. The CrowdStrike fall-out showed that rapid, global pushes with insufficient checks are unacceptable.
- Build multivendor resilience: adopt defense-in-depth — do not rely on a single vendor for mission-critical protections (identity, endpoint, backup and email). Test recovery playbooks that assume a major vendor is unavailable.
- Invest in Microsoft security literacy: train your SOC and device teams on Defender XDR, Entra ID P2 policies and Purview DLP rules. Managing Microsoft-native controls well can be a differentiator for your services.
Product and go-to-market implications for security vendors
Where third parties can still win
Third-party security vendors retain clear value propositions, particularly in:- Specialized detection capabilities (network detection, deception, advanced behavioral analytics).
- Breadth of response automation and cross-environment coverage (heterogeneous OS fleets, IoT, non-Microsoft cloud workloads).
- Differentiated managed service offerings (white-glove IR playbooks, MSSP-specific SLAs and compliance reporting).
The partnership playbook: integration, testing and certification
The Microsoft Virus Initiative (MVI) is a practical forum where Microsoft shares APIs, testing guidance and early access to platform changes. Vendors who participate can reduce integration friction and influence platform evolution. The MVI program will matter more in a world where Microsoft offers user-mode alternatives and stricter deployment expectations.Security vendors should consider:
- Joining or engaging with MVI and similar industry forums.
- Publicly documenting testing and staged deployment practices.
- Building rapid remediation and ‘safe rollback’ mechanisms for any code executing early in the boot process.
Regulation, policy and the antitrust lens
The structural question — can a platform owner fairly compete in adjacent markets? — has regulatory and policy implications. The CrowdStrike outage and subsequent kernel-access debate revived scrutiny around platform gatekeeping and whether Microsoft’s unique position can create an uneven playing field. Several outlets and industry analysts have highlighted the regulatory spotlight on any move that materially changes third-party access to the kernel or OS internals. That debate is active and will shape long-term platform governance.MSPs and vendors should monitor evolving compliance expectations and be ready to advise customers on auditability, contractual protections and third-party assurance for critical security controls.
A sober, pragmatic conclusion for MSPs and vendors
Microsoft’s dual role as OS owner and security vendor is not a one-time shock — it is the operating reality MSPs must plan around. The company’s continued investment in security at scale (including the Secure Future Initiative and the engineering resources behind it) provides concrete benefits in telemetry, identity integration, and multitenant management — benefits MSPs can leverage.At the same time, the CrowdStrike outage and the kernel-access debate are reminders that platform concentration carries systemic risk. Independent vendors and MSPs are right to press for openness, robust testing, and clear rollback assurances. The industry is moving toward safer platform mechanisms — including user-mode alternatives and improved recovery tooling — but those technical choices will not automatically level the playing field. They will instead reshape the types of advantages each vendor can reasonably claim.
For MSPs, the path forward is dual: embrace what Microsoft does well — telemetry, identity, scale and competitive SMB pricing — but maintain multivendor resilience and operational discipline. For third-party vendors, the imperative is clear: integrate where necessary, differentiate where you can, and make your operational safety and testing practices a marketable advantage.
The Microsoft-led evolution of endpoint architecture, licensing and platform policy is underway. MSPs who treat it as an opportunity to modernize processes, codify multivendor resilience and help customers buy security intentionally — not by default — will be best positioned when the next platform-level event tests that resilience again.
Conclusion
Microsoft’s rise in endpoint market share, its massive security investments, and the post-CrowdStrike technical pivot toward user-mode security fundamentally change the MSP security calculus. The choice for MSPs is neither to blindly resist Microsoft nor to accept it as a monopoly inevitability; instead, the sustainable strategy is the hard, practical work of architecture, testing, multi-layered defenses and commercial agility. Those MSPs and vendors that do the heavy lifting — integrating Microsoft productively while preserving independent controls and recovery capabilities — will convert platform concentration into an operational advantage rather than an existential risk.
Source: CRN Magazine Security Execs: Microsoft’s Position As OS, Security Software Provider Looms Over MSP Landscape
