Microsoft’s AI Risk Report Misses This Key Detail

The latest “Digital Defense Report” identifies government agencies as prime targets for AI attacks but doesn’t mention that they are broadly being targeted through Microsoft bugs.

Andrew Grotto,Director of the Program on Geopolitics, Technology, and Governance, Stanford University

November 2, 2026

OPINION

AI is changing cybersecurity. The hope is that software will eventually ship with fewer vulnerabilities, while the expectation in the meantime is that vendors will issue eye-popping volumes of software patches as a result of using AI to identify flaws in existing products. Software customers will increasingly use AI to more effectively and efficiently protect their networks. These promising developments will take time to unfold, as vendors and their customers learn how to incorporate AI into their software development and cybersecurity risk management workflows.

Attackers, meanwhile, are already using AI to generate novel attacks and orchestrate increasingly complex and large-scale hacking campaigns. AI is already enabling criminal groups to achieve hacking successes normally reserved for patient, highly resourced nation-state threat actors. And nation-state threat actors are using AI to increase the scale and sophistication of their cyber operations. The threat level is rising at an alarming rate.

Microsoft flagged the impacts of AI on cybersecurity in its recently released “2026 Digital Defense Report.” Among its findings, it assessed that government agencies and services were the most affected by cyber threats and frequently targeted for nation-state activity.

Blind Spot: Legacy Software

Microsoft’s report has a major blind spot, however: the impact of legacy software, especially its own, on organizations’ cyber-risk. Legacy software will remain the substrate of organizations’ attack surface for the foreseeable future. Vendors need to up their security game, and their customers need to demand better security from their vendors, particularly as AI heightens the threat landscape.

For example, with an 85% market share, Microsoft is the most dominant player in the US public sector productivity software market. Its products are therefore a prime target for state-sponsored groups seeking access to US government agencies and the data and secrets they are charged with protecting. So we should expect attackers to prize vulnerabilities in Microsoft’s products and devote a substantial proportion of their hacking efforts to these popular products.

Share of Cybersecurity Vulnerabilities

But there is more to the story than Microsoft’s sheer prevalence in federal IT. Microsoft’s grip on the federal IT market exposes the US government to a disproportionate share of cyber vulnerabilities. According to the Cybersecurity and Infrastructure Security Agency (CISA), Microsoft accounts for nearly 16% of known exploited vulnerabilities (KEVs) so far this year — the most of any company. Microsoft accounts for nearly 23% of known exploited vulnerabilities from November 2021 (when CISA began tracking KEVs) to October 2026.

By comparison, the next-highest vendor, Cisco, is responsible for approximately 7% in 2026 and 6% total, less than half of Microsoft’s share.

Some agencies even rely on Microsoft as their single software vendor. This isn’t particularly surprising — Microsoft has a track record of locking customers into its ecosystem by bundling its cloud computing offerings with office and security products (bundling is one area of focus of the Federal Trade Commission’s ongoing antitrust investigation into Microsoft) and then making it too difficult or costly for customers to switch vendors.

In 2023, the US Department of Veterans Affairs (VA) discontinued its Data Loss Prevention program after moving to bundle security tools into a sole-source Microsoft enterprise license. The move reportedly put 18 million veterans’ personal records at risk of leakage. The VA has now moved to reverse course by seeking alternatives to Microsoft, having recognized the consequences of a Microsoft monoculture. Lesson learned.

Microsoft’s Digital Defense Report identifies how frequently government agencies are affected by cyber threats and targeted for nation-state activity. Microsoft knows this firsthand. Since 2023, Chinese state-sponsored actors have compromised Microsoft products in at least two significant instances, accessing over two dozen US government agencies’ emails in one attack and compromising at least seven agencies in another in July 2025.

Russian state-backed actors have also exploited Microsoft’s weak security at least three times since 2020, including the infamous SolarWinds attack and an operation to exfiltrate emails between Microsoft personnel and government agencies. US government officials and advisory bodies have concluded that these breaches were preventable and caused by Microsoft’s negligence. The reach and severity of breaches will only grow as China, Russia, and other nation-state threat actors become AI-native and AI tools become increasingly sophisticated.

Microsoft deserves some credit for using AI to evaluate products it has already deployed: its record-setting Patch Tuesday count of 974 vulnerabilities disclosed last month is no doubt the result of using AI to identify flaws. But that’s not good enough.

All software vendors, including Microsoft, should invest more in the security of their products before they are released, even if it comes at the expense of slowing the rollout of new product features. And they should all be transparent to customers about these processes to enable customers to make more informed purchasing decisions. Otherwise, Microsoft’s “2027 Digital Defense Report” will paint an even darker picture of the threat environment.

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