There Is No Moat in AI Agents

There is no moat in AI agents. None. I’ll die on this hill. I switch between Grok Bot, Instinct, and Dots at basically zero cost. One Notion workspace, feed the new tool my context, done. If the cost of writing software is going to zero, API integrations are not a moat. The only moat left is user setup cost, which means winner-take-some, not winner-take-all.

That’s why AI collapses value the second an idea works. Jev, TypeSafe’s new AI model, got cloned within 48 hours of launch, and the people who built it captured nothing.

Meanwhile, the CEOs building this stuff say AI is killing humanity. Nobody said that about FaceTime. The real threat isn’t to humanity. It’s to anyone who thinks their product is safe.

I ran Henson Group for nearly 20 years. Microsoft’s tech changed constantly. Customers stayed because we ran their infrastructure, and leaving meant starting over. Same rule now. Your features will be copied by Friday. Your customers’ setup won’t.

Build what’s painful to leave.

Microsoft will give your customers up to 5 free Copilot Studio capacity packs for a year. The price of the gift is turning on the meter. On Oct. 21, Microsoft told its CSP partners the terms. A customer buys at least 300 new Microsoft 365 E7 seats, switches on pay-as-you-go billing, and buys 5 annual capacity packs. Microsoft matches each pack 1:1 for 12 months.

That is not a promotion. It is a migration plan.

Look at what’s coming next. AI Builder add-ons stop selling Nov. 1, and partners are told to plan Copilot Credits for those customers. From Dec. 1, new Copilot Business licenses in CSP ship with usage billing on by default, with a 4,000 credit per user monthly limit. Microsoft’s own partner guidance says early usage can create “a natural path to expanded consumption.”

I say the seat is now the on-ramp and the meter is the business. The seat price stays flat so nobody panics. The growth moves to credits, where most customers have no budget line yet.

Henson Group made the Inc. 5000 at #132 with 2,809% growth selling Microsoft cloud. In the channel, the partner who understands the customer’s bill before the customer does keeps the account.

Microsoft just shipped APIs for Copilot spending policies, but no detailed consumption reporting yet. Somebody has to own that gap.

So partners, pick a side: do you sell the free capacity and let the meter run, or do you get paid to put a cap on it?

Everyone’s freaking out about the Microsoft cuts. I believe Microsoft isn’t cutting 60,000 people. The headlines read “25%” as a layoff. And it’s true the Voluntary Exit Offer goes to about 60,000 eligible employees in participating teams in the U.S., Canada, the U.K. and India, roughly a quarter of its 223,000 staff. No age or tenure test, performance isn’t a factor, and sales isn’t participating.

About 30% took Microsoft’s retirement offer this spring. Microsoft already told GeekWire it expects a much smaller share this time. History agrees. In 2018, Verizon offered buyouts to 44,000 employees. About 10,400 accepted. The federal government’s 2025 buyouts drew roughly 154,000 people, 6.7% of the civilian workforce.

So the real number will be a fraction of the headline. And the opex story is about mix, not size. Amy Coleman’s memo calls the offer a way for teams “to adapt their workforce to changing needs,” while helping people “build new skills.” Reading the tea leaves, my bet is Microsoft refills a share of these seats with different skill sets. Fewer roles built more for AI.

So watch Microsoft’s hiring page, not the exit count, for the real take.

GitHub just made Copilot free. Every enterprise seat. $0. I spent years in Microsoft licensing. This is crazy. Since Wednesday, companies buying GitHub Enterprise Cloud through a GitHub or Microsoft account team can get Copilot for every user with no seat charge.

The catch: there is no included allowance. AI usage is metered from the first request against the company’s budget. Compare that with Copilot Business at $19 a user with 1,900 pooled credits. When the budget runs out, chat and code review stop. Completion keeps working. Nobody loses access.

This is not a discount. It’s a relocation. The cost just moved from the purchase order to the budget meeting.

A $19 seat is a line item a CFO can cut in a bad quarter. A $0 seat bundled into the platform license gives the CFO nothing to cut. The only lever left is the cap. And caps get raised the first time a team gets blocked mid-sprint.

In my years in the channel, I almost never lost a renewal on the product people used every day. I lost the add-ons, the ones sitting alone on the invoice where finance could see them.

GitHub just stopped being the add-on.

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Until next week,

Gregory Scott Henson