Antitrust Investigation Targets Microsoft Corp.
Microsoft Corp. is under the microscope as the US Federal Trade Commission (FTC) launches an antitrust investigation. The investigation will probe into several aspects of Microsoft’s business, including its cloud computing, software licensing, cybersecurity offerings, and artificial intelligence products.
The FTC has been conducting informal interviews with competitors and business partners for over a year. The agency recently issued a detailed demand for information from Microsoft, consisting of hundreds of pages. FTC Chair Lina Khan gave the green light to this demand, according to sources familiar with the matter.
Next week, FTC antitrust lawyers are scheduled to meet with Microsoft’s competitors to gather additional information about the company’s business practices. This information is confidential and the people involved wished to remain anonymous.
Both Microsoft and the FTC have declined to comment on the ongoing investigation.
Microsoft’s Cloud Computing and Cybersecurity Under Scrutiny
The FTC’s attention turned towards Microsoft’s cloud computing business following a series of cybersecurity incidents involving the company’s products. As a top government contractor, Microsoft provides billions of dollars in software and cloud services to US agencies, including the Defense Department.
The FTC’s demand for information from Microsoft is one of the final actions taken by Chair Lina Khan before she steps down. Her tenure has been marked by an aggressive push against consolidated corporate power. The responsibility of how to proceed with the case will fall onto the new FTC chair, who is yet to be named.
The FTC’s inquiry marks the return of scrutiny on Microsoft for its business practices. This comes more than 25 years after the government sued the company for similar conduct involving bundling its Windows operating system and browser and unsuccessfully tried to break it up.
Current Probe Focus
The current probe is focusing on how Microsoft bundles its popular office productivity and security software with its cloud offerings. Microsoft’s cybersecurity failings, especially considering its position as a government contractor, are seen as an example of the company’s problematic power over the market.
The FTC stated in a November 2023 report that the concentrated nature of the cloud market means that “outages, or other issues that degrade the service of a cloud provider, could have a cascading impact on the economy or specific sectors.”
Earlier this year, the CrowdStrike crash that affected millions of devices operating on Microsoft Windows systems was a testament to the widespread use of the company’s products and its direct impact on the global economy.
Part of the probe is also looking into Microsoft’s practices related to security software called Microsoft Entra ID — formerly known as Azure Active Directory. This software helps authenticate users logging in to cloud-based software.
Competitors have claimed that Microsoft’s licensing terms and bundling of software with cloud services makes it harder for rival authentication and cybersecurity companies to compete.
Companies such as Salesforce Inc.’s Slack and Zoom Communications Inc. have stated that Microsoft’s practice of giving away its Teams video-conferencing software for free in a bundle with popular software products like Word and Excel is anticompetitive and hinders their ability to compete.
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