Microsoft is reportedly being investigated by the US’s Federal Trade Commission (FTC) in a newly announced, wide-ranging probe.
Initially reported by Bloomberg and corroborated by several other publications, the FTC is allegedly assessing Microsoft’s cloud and software licensing operations, cybersecurity services, and AI solutions.
Last year, the FTC received complaints about Microsoft while conducting a broader examination of the cloud computing market. The investigation apparently stems from extensive information demands and follows a year of informal discussions with Microsoft’s competitors and partners.
According to Bloomberg sources, a key focus is how Microsoft bundles productivity and security software with its Azure cloud services, specifically how Microsoft’s allegedly punitive licensing terms impede customers from transferring business data from its Azure cloud service to competitor platforms.
The FTC’s apparent interest in Microsoft’s cloud business intensified following several security incidents involving its products, especially given Microsoft’s role as a major software provider for US government agencies. In April, the US Cyber Safety Review Board (CSRB) contended that Microsoft should have been better equipped to prevent Chinese hackers from breaching US government emails through its Microsoft Exchange Online software during the Storm-0558 cyberattack in July 2023.
The FTC and Microsoft have both declined to comment so far.
There is a potential twist, though. Donald Trump’s election as US president raises expectations that he will appoint a Republican with a more business-friendly approach, leaving the outcome of the prospective investigation uncertain.
However, it is not out of the question that the probe would continue. During Trump’s previous administration, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) filed notable antitrust lawsuits against Google and Meta, signalling a tougher stance on big tech despite expectations of an enterprise-friendly outlook.
The European Commission’s Investigation of Microsoft
The FTC’s proposed investigation harks back to Microsoft’s landmark antitrust lawsuit by the Department of Justice in the late 1990s, which centred on the company’s bundling of its web browser, Internet Explorer, with its Windows operating system.
However, there is also a far more recent high-profile regulatory investigation of its software licencing in recent years.
The European Commission has launched a formal investigation into Microsoft’s bundling practices following a 2020 complaint from Slack. The complaint centres on Microsoft’s integration of Teams into Office 365 in 2017, a move that eventually led to Teams replacing Skype for Business as the default communication tool.
Regulators have been examining whether Microsoft’s integration of Teams into Office 365 and Microsoft 365 subscriptions has limited business customers’ options by making Teams the default communication tool without providing a clear alternative.
In response to regulatory scrutiny, Microsoft unbundled Teams from its platforms in Europe last year and expanded this separation globally in April, citing “feedback” from the European Commission. This move was widely seen as an attempt to address antitrust concerns preemptively.
Despite these efforts, the European Commission remains unsatisfied and appears intent on moving forward with formal charges against the company. In June, the European Commission delivered a statement of objections to the tech giant over “possibly abusive” practices in bundling Teams and Office together. It posted its preliminary finding that Microsoft might have created a competitive imbalance.
Meanwhile, earlier this year, the FTC also launched an investigation into Microsoft and OpenAI‘s relationship as part of a broader probe into Gen AI practices.
Microsoft has invested around $13 billion in OpenAI over the past four years. Last November’s OpenAI saga, in which CEO Sam Altman was ousted by its board before being reinstated just four days later following intense pressure from both employees and investors, including Microsoft, was also believed to have been a factor, with Microsoft gaining a non-voting position on OpenAI’s board in the fallout of the incident.
