Significant... but the main threat to the other 87.5% is that developers try out Gitlab or other alternatives for their personal projects. These developers find that Gitlab is pretty good, and don't push their companies to pay for Github. Whereas if every developer starts out using Github exclusively for personal projects, it becomes the default choice when they start work.

With this change, Github foregoes a little revenue in exchange for securing the vast majority of their revenue.

Exactly this. Just this weekend, I setup my first CodeCommit (AWS) repo because I needed a private git repo for a new project and didn't want to pay github for it.

It turned out to be damned easy (and very cheap) and that's a serious threat to github's future growth because once people start to default elsewhere for one type of their work, it tends to drag along other types of their work.

That was always the case, though. It's just that Github's network effects were always powerful enough to counteract this effect.

But, for one very obvious reason, people have grown more and more interested in finding alternatives to Github, and they're forced to compete.

It is for a lot of companies, but not at the scale of Microsoft. Keep in mind companies like Google/MS/Apple/etc kill products that have 10s of millions of revenue because while it's a ton of money, it's a drop in the bucket compared to their other sources of revenue. 12.5% of their 300M revenue is a tiny amount for MS to absorb to solidify themselves against their competitors as the main open source hub.

Gitlab and Bitbucket both heavily positioned themselves against Github with their unlimited private repos feature. With this competing with Github is going to become much harder. I think it's a smart move for MS.

Unless it's shrinking as devs realize other platforms offer a free version of the same service. Especially if those devs decide that they like the new platform better, and convince their company to use it.