Microsoft Corporation is an American multinational technology corporation which produces Software, consumer electronics, personal computers, and related services. Its best-known software products are the Microsoft Windows line of , the Microsoft Office suite, and the Internet Explorer and Microsoft Edge . Its flagship hardware products are the Xbox video game consoles and the Microsoft Surface lineup of touchscreen personal computers. Microsoft ranked No. 21 in the 2020 Fortune 500 rankings of the largest United States corporations by total revenue; it was the world's largest software maker by revenue as of 2016. It is one of the Big Tech American information technology companies, alongside Google, Amazon, Apple, and Meta Platforms.
Microsoft (the word being a portmanteau of "microcomputer software") was founded by Bill Gates and Paul Allen on April 4, 1975, to develop and sell BASIC interpreters for the Altair 8800. It rose to dominate the personal computer operating system market with MS-DOS in the mid-1980s, followed by Microsoft Windows. The company's 1986 initial public offering (IPO), and subsequent rise in its share price, created three billionaires and an estimated 12,000 millionaires among Microsoft employees. Since the 1990s, it has increasingly diversified from the operating system market and has made a number of corporate acquisitions, their largest being the acquisition of LinkedIn for $26.2 billion in December 2016, followed by their acquisition of Skype Technologies for $8.5 billion in May 2011.
, Microsoft is market-dominant in the IBM PC compatible operating system market and the office software suite market, although it has lost the majority of the overall operating system market to Android. The company also produces a wide range of other consumer and enterprise software for desktops, laptops, tabs, gadgets, and servers, including Internet search (with Microsoft Bing), the digital services market (through MSN), mixed reality (HoloLens), cloud computing (Microsoft Azure), and software development (Visual Studio).
Steve Ballmer replaced Gates as CEO in 2000, and later envisioned a "devices and services" strategy. This unfolded with Microsoft acquiring Danger Inc. in 2008, entering the personal computer production market for the first time in June 2012 with the launch of the Microsoft Surface line of , and later forming Microsoft Mobile through the acquisition of Nokia's devices and services division. Since Satya Nadella took over as CEO in 2014, the company has scaled back on hardware and has instead focused on cloud computing, a move that helped the company's shares reach its highest value since December 1999.
Earlier dethroned by Apple in 2010, in 2018 Microsoft reclaimed its position as the most valuable publicly traded company in the world. In April 2019, Microsoft reached the market cap, becoming the third U.S. public company to be valued at over $1 trillion after Apple and Amazon respectively. , Microsoft has the third-highest global brand valuation.
Microsoft entered the operating system (OS) business in 1980 with its own version of Unix called Xenix, but it was MS-DOS that solidified the company's dominance. IBM awarded a contract to Microsoft in November 1980 to provide a version of the CP/M OS to be used in the IBM Personal Computer (IBM PC).
In 1990, Microsoft introduced the Microsoft Office suite which bundled separate applications such as Microsoft Word and Microsoft Excel. On May 22, Microsoft launched Windows 3.0, featuring streamlined user interface graphics and improved protected mode capability for the Intel 386 processor, and both Office and Windows became dominant in their respective areas.
On July 27, 1994, the Department of Justice's Antitrust Division filed a competitive impact statement which said: "Beginning in 1988 and continuing until July 15, 1994, Microsoft induced many OEMs to execute anti-competitive 'per processor' licenses. Under a per-processor license, an OEM pays Microsoft a royalty for each computer it sells containing a particular microprocessor, whether the OEM sells the computer with a Microsoft operating system or a non-Microsoft operating system. In effect, the royalty payment to Microsoft when no Microsoft product is being used acts as a penalty, or tax, on the OEM's use of a competing PC operating system. Since 1988, Microsoft's use of per processor licenses has increased."
On January 13, 2000, Bill Gates handed over the CEO position to Steve Ballmer, an old college friend of Gates and employee of the company since 1980, while creating a new position for himself as Chief Software Architect. Various companies including Microsoft formed the Trusted Computing Platform Alliance in October 1999 to (among other things) increase security and protect intellectual property through identifying changes in hardware and software. Critics decried the alliance as a way to enforce indiscriminate restrictions over how consumers use software, and over how computers behave, and as a form of digital rights management: for example the scenario where a computer is not only secured for its owner, but also secured against its owner as well.
Increasingly present in the hardware business following Xbox, Microsoft in 2006 released the Zune series of digital media players, a successor of its previous software platform Portable Media Center. These expanded on previous hardware commitments from Microsoft following its original Microsoft Mouse in 1983; as of 2007 the company sold the best-selling wired keyboard (Natural Ergonomic Keyboard 4000), mouse (IntelliMouse), and desktop webcam (LifeCam) in the United States. That year the company also launched the Surface "digital table", later renamed PixelSense.
Gates retired from his role as Chief Software Architect on June 27, 2008, a decision announced in June 2006, while retaining other positions related to the company in addition to being an advisor for the company on key projects. Microsoft Azure, the company's entry into the cloud computing market for Windows, launched on October 27, 2008. On February 12, 2009, Microsoft announced its intent to open a chain of Microsoft-branded retail stores, and on October 22, 2009, the first retail Microsoft Store opened in Scottsdale, Arizona; the same day Windows 7 was officially released to the public. Windows 7's focus was on refining Vista with ease-of-use features and performance enhancements, rather than an extensive reworking of Windows.
As the smartphone industry boomed in the late 2000s, Microsoft had struggled to keep up with its rivals in providing a modern smartphone operating system, falling behind Apple and Google-sponsored Android in the United States. As a result, in 2010 Microsoft revamped their aging flagship mobile operating system, Windows Mobile, replacing it with the new Windows Phone OS that was released in October that year.
In July 2012, Microsoft sold its 50% stake in MSNBC, which it had run as a joint venture with NBC since 1996. On October 1, Microsoft announced its intention to launch a news operation, part of a new-look MSN, with Windows 8 later in the month. On October 26, 2012, Microsoft launched Windows 8 and the Microsoft Surface. Three days later, Windows Phone 8 was launched. To cope with the potential for an increase in demand for products and services, Microsoft opened a number of "holiday stores" across the U.S. to complement the increasing number of "bricks-and-mortar" Microsoft Stores that opened in 2012. On March 29, 2013, Microsoft launched a Patent Tracker.
The Kinect, a motion-sensing input device made by Microsoft and designed as a Game controller, first introduced in November 2010, was upgraded for the 2013 release of the Xbox One video game console. Kinect's capabilities were revealed in May 2013: an ultra-wide 1080p camera, function in the dark due to an infrared sensor, higher-end processing power and new software, the ability to distinguish between fine movements (such as a thumb movement), and determining a user's heart rate by looking at their face. Microsoft filed a patent application in 2011 that suggests that the corporation may use the Kinect camera system to monitor the behavior of television viewers as part of a plan to make the viewing experience more interactive. On July 19, 2013, Microsoft stocks suffered their biggest one-day percentage sell-off since the year 2000, after its fourth-quarter report raised concerns among the investors on the poor showings of both Windows 8 and the Surface tablet. Microsoft suffered a loss of more than US$32 billion.
In line with the maturing PC business, in July 2013, Microsoft announced that it would reorganize the business into four new business divisions, namely Operating System, Apps, Cloud, and Devices. All previous divisions will be dissolved into new divisions without any workforce cuts. On September 3, 2013, Microsoft agreed to buy Nokia's mobile unit for $7 billion, following Amy Hood taking the role of CFO.
On January 21, 2015, Microsoft announced the release of their first Interactive whiteboard, Surface Hub. On July 29, 2015, Windows 10 was released, with its server sibling, Windows Server 2016, released in September 2016. In Q1 2015, Microsoft was the third largest maker of mobile phones, selling 33 million units (7.2% of all). While a large majority (at least 75%) of them do not run any version of Windows Phone— those other phones are not categorized as by Gartner in the same time frame 8 million Windows smartphones (2.5% of all smartphones) were made by all manufacturers (but mostly by Microsoft). Microsoft's share of the U.S. smartphone market in January 2016 was 2.7%. During the summer of 2015 the company lost $7.6 billion related to its mobile-phone business, firing 7,800 employees.
On March 1, 2016, Microsoft announced the merger of its PC and Xbox divisions, with Phil Spencer announcing that Universal Windows Platform (UWP) apps would be the focus for Microsoft's gaming in the future. On January 24, 2017, Microsoft showcased Intune for Education at the BETT 2017 education technology conference in London. Intune for Education is a new cloud-based application and device management service for the education sector. In May 2016, the company announced it was laying off 1,850 workers, and taking an impairment and restructuring charge of $950 million. In June 2016, Microsoft announced a project named Microsoft Azure Information Protection. It aims to help enterprises protect their data as it moves between servers and devices. In November 2016, Microsoft joined the Linux Foundation as a Platinum member during Microsoft's Connect(); developer event in New York. The cost of each Platinum membership is US$500,000 per year. Some analysts deemed this unthinkable ten years prior, however, as in 2001 then-CEO Steve Ballmer called Linux "cancer". Microsoft planned to launch a preview of Intune for Education "in the coming weeks", with general availability scheduled for spring 2017, priced at $30 per device, or through volume licensing agreements.
In January 2018, Microsoft patched Windows 10 to account for CPU problems related to Intel's Meltdown security breach. The patch led to issues with the Microsoft Azure virtual machines reliant on Intel's CPU architecture. On January 12, Microsoft released PowerShell for the macOS and Linux operating systems. In February 2018, Microsoft killed notification support for their Windows Phone devices which effectively ended firmware updates for the discontinued devices. In March 2018, Microsoft recalled Windows 10 S to change it to a mode for the Windows operating system rather than a separate and unique operating system. In March the company also established guidelines that censor users of Office 365 from using profanity in private documents. In April 2018, Microsoft released the source code for Windows File Manager under the MIT License to celebrate the program's 20th anniversary. In April the company further expressed willingness to embrace open source initiatives by announcing Azure Sphere as its own derivative of the Linux operating system. In May 2018, Microsoft partnered with 17 American intelligence agencies to develop cloud computing products. The project is dubbed "Azure Government" and has ties to the Joint Enterprise Defense Infrastructure (JEDI) surveillance program. On June 4, 2018, Microsoft officially announced the acquisition of GitHub for $7.5 billion, a deal that closed on October 26, 2018. On July 10, 2018, Microsoft revealed the Surface Go platform to the public. Later in the month it converted Microsoft Teams to gratis. In August 2018, Microsoft released two projects called Microsoft AccountGuard and Defending Democracy. It also unveiled Snapdragon 850 compatibility for Windows 10 on the ARM architecture.
In August 2018, Toyota Tsusho began a partnership with Microsoft to create fish farming tools using the Microsoft Azure application suite for Internet of things (IoT) technologies related to water management. Developed in part by researchers from Kindai University, the water pump mechanisms use artificial intelligence to count the number of fish on a conveyor belt, analyze the number of fish, and deduce the effectiveness of water flow from the data the fish provide. The specific used in the process fall under the Azure Machine Learning and the Azure IoT Hub platforms. In September 2018, Microsoft discontinued Skype. On October 10, 2018, Microsoft joined the Open Invention Network community despite holding more than 60,000 patents. In November 2018, Microsoft agreed to supply 100,000 Microsoft HoloLens headsets to the United States military in order to "increase lethality by enhancing the ability to detect, decide and engage before the enemy." In November 2018, Microsoft introduced Azure Multi-Factor Authentication for Microsoft Azure. In December 2018, Microsoft announced Project Mu, an open source release of the Unified Extensible Firmware Interface (UEFI) core used in Microsoft Surface and Hyper-V products. The project promotes the idea of Project Mu. In the same month, Microsoft announced the open source implementation of Windows Forms and the Windows Presentation Foundation (WPF) which will allow for further movement of the company toward the transparent release of key frameworks used in developing Windows desktop applications and software. December also saw the company discontinue the Microsoft Edge project in favor of Chromium backends for their browsers.
On February 20, 2019, Microsoft Corp said it will offer its cyber security service AccountGuard to 12 new markets in Europe including Germany, France and Spain, to close security gaps and protect customers in political space from hacking. Microsoft expands political security service to 12 European countries , Reuters (February 20, 2019) In February 2019, hundreds of Microsoft employees protested the company's war profiteering from a $480 million contract to develop virtual reality headsets for the United States Army.
On July 31, 2020, it was reported that Microsoft was in talks to acquire TikTok after the Trump administration ordered ByteDance to Divestment ownership of the application to the U.S. On August 3, 2020, after speculation on the deal, Donald Trump stated that Microsoft could buy the application, however it should be completed by September 15, 2020, and that the United States Department of the Treasury should receive a portion if it were to go through.
On August 5, 2020, Microsoft stopped its xCloud game streaming test for iOS devices. According to Microsoft, the future of xCloud on iOS remains unclear and potentially out of Microsoft's hands. Apple has imposed a strict limit on "remote desktop clients" that means applications are only allowed to connect to a user-owned host device or gaming console owned by the user. On September 21, 2020, Microsoft announced its intent to acquire video game company ZeniMax Media, the parent company of Bethesda Softworks, for about $7.5 billion, with the deal expected to be occurred in the second half of 2021 fiscal year. On March 9, 2021, the acquisition was finalized and ZeniMax Media became part of Microsoft's Xbox Game Studios division. The total price of the deal was $8.1 billion.
On September 22, 2020, Microsoft announced that it had an exclusive license to use OpenAI’s GPT-3 artificial intelligence language generator. The previous version of GPT-3, called GPT-2, made headlines for being “too dangerous to release” and had numerous capabilities, including designing websites, prescribing medication, answering questions and penning articles. On November 10, 2020, Microsoft released the Xbox Series X and Xbox Series S video game consoles.
In April 2021, Microsoft announced it would buy Nuance Communications for approximately $16 billion. The acquisition of Nuance was completed in March 2022. In 2021, in part due to the strong quarterly earnings spurred by the COVID-19 pandemic, Microsoft's valuation came to near $2 trillion. The increased necessity for remote work and distance education drove demand for cloud computing and grew the company's gaming sales.
On June 24, 2021, Microsoft announced Windows 11 during a livestream. The announcement came with confusion after Microsoft announced Windows 10 would be the last version of the operating system; set to be released in Fall 2021. It was released to the general public on October 5, 2021.
In October 2021, Microsoft announced that it began rolling out end-to-end encryption (E2EE) support for Microsoft Teams calls in order to secure business communication while using video conferencing software. Users can ensure that their calls are encrypted and can utilize a security code which both parties on a call must verify on respective ends. On October 7, Microsoft acquired Ally.io, a software service that measures companies' progress against . Microsoft plans to incorporate Ally.io into its Viva family of employee experience products.
On January 18, 2022, Microsoft announced the acquisition of American video game developer and holding company Activision Blizzard in an all-cash deal worth $68.7 billion. Activision Blizzard is best known for producing franchises, including but not limited to Warcraft, Diablo, Call of Duty, StarCraft, Candy Crush Saga, and Overwatch. Activision and Microsoft each released statements saying the acquisition was to benefit their businesses in the metaverse, many saw Microsoft's acquisition of video game studios as an attempt to compete against Meta Platforms, with TheStreet referring to Microsoft wanting to become "the Disney of the metaverse". Microsoft has not released statements regarding Activision's recent legal controversies regarding employee abuse, but reports have alleged that Activision CEO Bobby Kotick, a major target of the controversy, will leave the company after the acquisition is finalized. The deal is expected to close in 2023 followed by a review from the US Federal Trade Commission.
On March 13, 2020, Gates announced that he is leaving the board of directors of Microsoft and Berkshire Hathaway to focus more on his philanthropic efforts. According to Aaron Tilley of The Wall Street Journal this is "marking the biggest boardroom departure in the tech industry since the death of longtime rival and Apple Inc. co-founder Steve Jobs."
On January 13, 2022, The Wall Street Journal reported the Microsoft's board of directors plans to hire an external law firm to review its sexual harassment and gender discrimination policies, and to release a summary of how the company handled past allegations of misconduct against Bill Gates and other corporate executives.
Standard & Poor's and Moody's Investors Service have both given a AAA rating to Microsoft, whose assets were valued at $41 billion as compared to only $8.5 billion in unsecured debt. Consequently, in February 2011 Microsoft released a corporate bond amounting to $2.25 billion with relatively low borrowing rates compared to . For the first time in 20 years Apple Inc. surpassed Microsoft in Q1 2011 quarterly profits and revenues due to a slowdown in PC sales and continuing huge losses in Microsoft's Online Services Division (which contains its search engine Bing). Microsoft profits were $5.2 billion, while Apple Inc. profits were $6 billion, on revenues of $14.5 billion and $24.7 billion respectively. Microsoft's Online Services Division has been continuously loss-making since 2006 and in Q1 2011 it lost $726 million. This follows a loss of $2.5 billion for the year 2010.
On July 20, 2012, Microsoft posted its first quarterly loss ever, despite earning record revenues for the quarter and fiscal year, with a net loss of $492 million due to a writedown related to the advertising company aQuantive, which had been acquired for $6.2 billion back in 2007. As of January 2014, Microsoft's market capitalization stood at $314B, making it the 8th largest company in the world by market capitalization. On November 14, 2014, Microsoft overtook ExxonMobil to become the second most-valuable company by market capitalization, behind only Apple Inc. Its total market value was over $410B—with the stock price hitting $50.04 a share, the highest since early 2000. In 2015, Reuters reported that Microsoft Corp had earnings abroad of $76.4 billion which were untaxed by the Internal Revenue Service. Under U.S. law, corporations don't pay income tax on overseas profits until the profits are brought into the United States.
As part of the "Get the Facts" campaign, Microsoft highlighted the .NET Framework trading platform that it had developed in partnership with Accenture for the London Stock Exchange, claiming that it provided "five nines" reliability. After suffering extended downtime and unreliability the London Stock Exchange announced in 2009 that it was planning to drop its Microsoft solution and switch to a Linux-based one in 2010.
In 2012, Microsoft hired a political pollster named Mark Penn, whom The New York Times called "famous for bulldozing" his political opponents as Executive Vice-president, Advertising and Strategy. Penn created a series of negative advertisements targeting one of Microsoft's chief competitors, Google. The advertisements, called "Scroogled", attempt to make the case that Google is "screwing" consumers with search results rigged to favor Google's paid advertisers, that Gmail violates the privacy of its users to place ad results related to the content of their emails and shopping results, which favor Google products. Tech publications like TechCrunch have been highly critical of the advertising campaign, while Google employees have embraced it.
During the first six months in 2013, Microsoft had received requests that affected between 15,000 and 15,999 accounts. In December 2013, the company made statement to further emphasize the fact that they take their customers' privacy and data protection very seriously, even saying that "government snooping potentially now constitutes an 'advanced persistent threat,' alongside sophisticated malware and cyber attacks". The statement also marked the beginning of three-part program to enhance Microsoft's encryption and transparency efforts. On July 1, 2014, as part of this program they opened the first (of many) Microsoft Transparency Center, that provides "participating governments with the ability to review source code for our key products, assure themselves of their software integrity, and confirm there are no "back doors." Microsoft has also argued that the United States Congress should enact strong privacy regulations to protect consumer data.
In April 2016, the company sued the U.S. government, arguing that secrecy orders were preventing the company from disclosing warrants to customers in violation of the company's and customers' rights. Microsoft argued that it was unconstitutional for the government to indefinitely ban Microsoft from informing its users that the government was requesting their emails and other documents, and that the Fourth Amendment made it so people or businesses had the right to know if the government searches or seizes their property. On October 23, 2017, Microsoft said it would drop the lawsuit as a result of a policy change by the United States Department of Justice (DoJ). The DoJ had "changed data request rules on alerting the Internet users about agencies accessing their information."
Noted for its internal lexicon, the expression "eating your own dog food" is used to describe the policy of using pre-release and beta versions of products inside Microsoft in an effort to test them in "real-world" situations. This is usually shortened to just "dog food" and is used as noun, verb, and adjective. Another bit of jargon, FYIFV or FYIV ("Fuck You, I'm Fully Vested"), is used by an employee to indicate they are financially independent and can avoid work anytime they wish.
Microsoft is an outspoken opponent of the cap on H-1B visas, which allow companies in the U.S. to employ certain foreign workers. Bill Gates claims the cap on H1B visas makes it difficult to hire employees for the company, stating "I'd certainly get rid of the H1B cap" in 2005. Critics of H1B visas argue that relaxing the limits would result in increased unemployment for U.S. citizens due to H1B workers working for lower salaries. The Human Rights Campaign Corporate Equality Index, a report of how progressive the organization deems company policies towards LGBT employees, rated Microsoft as 87% from 2002 to 2004 and as 100% from 2005 to 2010 after they allowed gender expression.
In August 2018, Microsoft implemented a policy for all companies providing subcontractors to require 12 weeks of paid parental leave to each employee. This expands on the former requirement from 2015 requiring 15 days of paid vacation and sick leave each year. In 2015, Microsoft established its own parental leave policy to allow 12 weeks off for parental leave with an additional 8 weeks for the parent who gave birth.
Microsoft's main U.S. campus received a silver certification from the Leadership in Energy and Environmental Design (LEED) program in 2008, and it installed over 2,000 on top of its buildings at its Silicon Valley campus, generating approximately 15 percent of the total energy needed by the facilities in April 2005. Microsoft makes use of alternative forms of transit. It created one of the world's largest private bus systems, the "Connector", to transport people from outside the company; for on-campus transportation, the "Shuttle Connect" uses a large fleet of hybrid cars to save fuel. The company also subsidizes regional public transport, provided by Sound Transit and King County Metro, as an incentive. In February 2010, however, Microsoft took a stance against adding additional public transport and high-occupancy vehicle (HOV) lanes to the State Route 520 and its floating bridge connecting Redmond to Seattle; the company did not want to delay the construction any further. Microsoft was ranked number 1 in the list of the World's Best Multinational Workplaces by the Great Place to Work Institute in 2011. In January 2020, the company promised the carbon dioxide removal of all carbon that it has emitted since its foundation in 1975. On October 9, 2020, Microsoft permanently allowed remote work. In January 2021, the company announced on Twitter to join the Climate Neutral Data Centre Pact, which engages the cloud infrastructure and data centers industries to reach carbon neutrality in Europe by 2030.
On August 23, 2012, Microsoft unveiled a new corporate logo at the opening of its 23rd Microsoft store in Boston, indicating the company's shift of focus from the classic style to the tile-centric modern interface, which it uses/will use on the Windows Phone platform, Xbox 360, Windows 8 and the upcoming Office Suites. The new logo also includes four squares with the colors of the then-current Windows logo which have been used to represent Microsoft's four major products: Windows (blue), Office (red), Xbox (green) and Bing (yellow). The logo also resembles the opening of one of the commercials for Windows 95.
The company was a Major sponsor of the Toyota Gazoo Racing WRT (2017-2020).
The company was a sponsor of the Renault F1 Team (2016-2020).
As reported by several news outlets, an Irish subsidiary of Microsoft based in the Republic of Ireland declared £220 bn in profits but paid no corporation tax for the year 2020. This is due to the company being tax resident in Bermuda as mentioned in the accounts for 'Microsoft Round Island One', a subsidiary that collects licence fees from the use of Microsoft software worldwide. Dame Margaret Hodge, a Labour MP in the UK said, "It is unsurprising – yet still shocking – that massively wealthy global corporations openly, unashamedly and blatantly refuse to pay tax on the profits they make in the countries where they undertake business".
In 2020, ProPublica reported that the company had diverted more than $39 billion in U.S. profits to Puerto Rico using a mechanism structured to make it seem as if the company was unprofitable on paper. As a result, the company paid a tax rate on those profits of "nearly 0%." When the Internal Revenue Service audited these transactions, ProPublica reported that Microsoft aggressively fought back, including successfully lobbying Congress to change the law to make it harder for the agency to conduct audits of large corporations.
"Embrace, extend, and extinguish" (EEE), also known as "embrace, extend, and exterminate", is a phrase that the U.S. Department of Justice found that was used internally by Microsoft to describe its strategy for entering product categories involving widely used standards, extending those standards with proprietary capabilities, and then using those differences to strongly disadvantage competitors. Microsoft is frequently accused of using anticompetitive tactics and abusing its monopolistic power. People who use their products and services often end up becoming dependent on them, a process known as vendor lock-in.
Microsoft was the first company to participate in the PRISM surveillance program, according to leaked NSA documents obtained by The Guardian and The Washington Post in June 2013, and acknowledged by government officials following the leak. The program authorizes the government to secretly access data of non-US citizens hosted by American companies without a warrant. Microsoft has denied participation in such a program.