Microsoft Faces Wide-ranging Us Antitrust Probe

The US Federal Trade Commission has opened a broad antitrust investigation into Microsoft, including of its software licensing and cloud computing businesses, a source familiar with the matter said on Wednesday.

The probe was cleared by FTC chair Lina Khan even before she is likely to leave in January. But the election of Donald Trump as US president and the expectation he will appoint a fellow Republican with a softer approach toward business leave the outcome of the investigation still up in the air.

The FTC is investigating whether the software behemoth is using its market power in productivity software to coerce customers into not taking their data from its Azure cloud service to other competitive platforms, according to sources confirmed earlier this month.

The source said the FTC is also examining practices of the company in relation to cybersecurity and artificial intelligence products, on Wednesday.

Competition has often criticized Microsoft's practices they claim lock customers into its cloud offering, Azure. The FTC took such complaints last year as it examined the cloud computing market.

NetChoice, a lobbying group that represents online companies, including Amazon and Google, which compete with Microsoft in cloud computing, has criticized Microsoft's licensing policies and its integrating AI tools into its Office and Outlook.

"Given that Microsoft is the world's largest Software company, dominating in productivity and operating systems software, the scale and consequences of its licensing decisions are extraordinary," the group said.

Google in September complained to the European Commission about Microsoft's practices, saying it made customers pay a 400% markup to keep running Windows Server on rival cloud computing operators, and gave them later and more limited security updates.

The agency has demanded a wide range of detailed information from Microsoft, Bloomberg reported earlier on Wednesday.

It had already claimed jurisdiction over probes into Microsoft and OpenAI regarding competition in artificial intelligence and begun investigating its $650 million deal with AI startup Inflection AI.

Microsoft has somewhat been an exception to the campaign by US antitrust regulators against allegedly anticompetitive practices at big tech companies recently.

Facebook owner Meta Platforms, Apple, and Amazon.com Inc. have all been charged by the US of violating antitrust laws by holding monopolies.

Alphabet's Google is being sued twice, including a case where a judge ruled that the search company broke the law by stifling competition among internet search services.

Microsoft CEO Satya Nadella testified in Google's case, saying that the search leader was abusing exclusive deals with publishers to lock up content used to train artificial intelligence.

It is unclear if Trump will soften on big tech, whose first administration launched several big tech probes. Incoming vice president JD Vance has expressed concerns about the power the companies wield over public discourse.

"The Trump administration was an aggressive enforcer of the antitrust laws," said Andre Barlow, a lawyer with Doyle Barlow & Mazard, noting it filed suits against Google and Facebook.

"When administrations change, the agencies do not necessarily abandon in-place investigations," he noted, saying that "administrative shifts can result in enforcement priorities being altered and even how vigorously various types of behavior are being pursued."

However, in past years, Trump policies benefited Microsoft.

It won a $10 billion cloud computing contract in 2019, one that Amazon had been expected to win. Later, Amazon claimed that Trump applied improper pressure on military officials to get the contract away from its Amazon Web Services unit.