Adobe, Microsoft… who’s next? AI enabled clones of packaged software have made the industry sit up

Thomas has cloned Microsoft Office too; Autodesk is next. AI coding tools do not need one to copy the target’s source code. Whether such efforts constitute legitimate competition or cross legal limits is a question of detail that jurists may or may not be able to grasp. In the interim, clones could blunt the edge of established vendors and cramp their pricing power.

In February, Anthropic’s release of 11 open-source agentic AI tools for its Claude Cowork platform had rattled global software stocks and pushed Indian IT companies on the defensive, as investors asked whether agents could replace software products and services at scale. The same lab’s Mythos model then took the shape of a wrecking ball for cybersecurity sellers.

Even software-as-a-service firms are feeling the heat. In a post, Zoho co-founder Sridhar Vembu said the company would have to reinvent itself amid an “uncertain business outlook for software.” Rising server costs and AI bills have begun to weigh on companies like Zoho.

Cheap software scrambled together with AI cannot count on instant adoption, though; at least not by users who need reliable and secure systems. It can take much more effort to review AI-spun code than human work. Running such software locally without telemetry may reduce privacy risks, but does not assure either reliability or security.

Corporate users would also be wary of the intellectual property questions that arise. Thomas claimed a “clean room” approach that used new code based on public specifications and observed behaviour, instead of copying Adobe’s source code. This method does have precedents. However, matters of copyright, trademarks and trade secrets are not treated the same way across jurisdictions.

By now, software companies must be well aware that customers may switch to free or cheaper options if the latter find the trade-offs acceptable. Given their deep pockets, incumbents could try buying out startups that pose a threat, although this could invite even more cloning.

Open-source offerings could aim for the enterprise market with quality and legal assurances, much as IBM’s Red Hat does for Linux. Software majors could also leverage their brand appeal, distribution networks and client relationships, while upgrading their warranty coverage of risks. With some effort, users who dabble with other options could potentially be lured back.

How the market pie of packaged software is eventually shared will be determined by what users trust. In that sense, this contest has only just begun. As with Indian IT services, it also makes space for contrarian bets on this industry’s future.

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