Data#3 Ltd (ASX: DTL) shares are having a day to forget on Tuesday.

In morning trade, the ASX 200 tech stock is down 13% to a 52-week low of $6.45.

What is Data#3?

Data3 is an Australian information technology (IT) services and solutions provider with a focus on helping its customers solve complex business challenges using innovative technology solutions.

It delivers an integrated array of solutions spanning cloud, modern workplace, security, data and analytics, and connectivity. It notes that these technology solutions are delivered by combining Data3's services across consulting, project services, and support services.

Among its vendor partners are Adobe, Cisco, Dell, HP, and Microsoft.

Why is this ASX 200 tech stock crashing?

Investors have been selling the company's shares after it released an update on its vendor partnership with tech giant Microsoft.

According to the release, Microsoft has announced changes to its partner incentive program that will reduce the incentives earned by the ASX 200 tech stock on its Microsoft Enterprise agreements from 1 January 2025.

Microsoft has also advised that it will increase its focus on Small, Medium and Corporate (SMC) initiatives and increase incentives for its Copilot, Security, Azure Migrations, and Cloud Solutions Provider (CSP) programs.

The response

The ASX 200 tech stock notes that Microsoft has been introducing gradual changes to its incentive programs over recent years.

While this latest announcement represents a more significant change to Microsoft's incentive programs, Data# 3 has implemented a range of strategic initiatives to manage the change in focus.

This includes examining resources servicing the Microsoft Enterprise business, increasing its focus on the SMC segment, and bolstering its CSP business.

The impact

Management advised that if the full effect of the changes in its Microsoft Enterprise Channel Incentives had applied throughout all of FY 2024, it would have reduced gross profit by about 3%.

However, it warns that this is not a forecast on the future impact of these changes as the effect in future years will depend on various other factors.

Furthermore, the changes do not influence the ASX 200 tech stock's Infrastructure Solutions, however they will provide the opportunity to increase revenue and improve profitability in services.

For now, there is no change to its first half guidance for a pre-tax profit of $31 million to $33 million.

And the "FY25 financial impact of the incentive changes is expected to be immaterial" and "with other areas of the business growing, Data# 3 still currently expects to achieve sustainable earnings growth for the full 2025 financial year."

In light of this, today's selling could potentially be classed as an overreaction. Though, time will tell if that is the case.