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.

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.