The United States Federal Trade Commission has commenced a thorough antitrust investigation into Microsoft Corporation. The investigation centers on Microsoft's software licensing practices and cloud computing operations, as disclosed by a well-informed source to Reuters.
This inquiry was approved by FTC Chair Lina Khan before her expected departure in January. The election of Donald Trump as President of the United States, coupled with the expectation that he will appoint a Republican with a more relaxed stance on business, introduces uncertainty regarding the investigation's outcome.
The FTC is scrutinizing claims that the software giant may be misusing its market dominance in productivity software by enforcing restrictive licensing agreements that hinder customers from transferring their data from its Azure cloud service to competing platforms, sources indicated earlier this month.
Additionally, the FTC is investigating practices related to cybersecurity and artificial intelligence products, the source noted on Wednesday.
Microsoft chose not to provide a comment on the matter on Wednesday.
Competition complains about practices
Competitors have criticized Microsoft's practices they say keep customers locked into its cloud offering, Azure. The FTC fielded such complaints last year as it examined the cloud computing market.
NetChoice, a lobbying group that represents online companies such as Amazon and Google, which compete with Microsoft in cloud computing, criticized Microsoft's licensing policies, and its integration of 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% mark-up to keep running Windows Server on rival cloud computing operators, and gave them later and more limited security updates.
The FTC has demanded a broad range of detailed information from Microsoft, Bloomberg reported earlier on Wednesday.
The agency had already claimed jurisdiction over probes into Microsoft and OpenAI over competition in artificial intelligence and started looking into Microsoft's $650 million deal with AI startup Inflection AI.
Other companies faced accusations
Microsoft has been somewhat of an exception to U.S. antitrust regulators' recent campaign against allegedly anticompetitive practices at Big Tech companies.
Meta Platforms, Apple, and Amazon.com Inc. are facing accusations from the United States government for allegedly maintaining monopolies in an unlawful manner.
Alphabet's Google is embroiled in two lawsuits, one of which resulted in a judge's finding that the company engaged in unlawful actions to hinder competition within the online search engine market.
During Google's trial, Microsoft CEO Satya Nadella provided testimony stating that Google utilized exclusive agreements with publishers to secure content used for training artificial intelligence, thereby limiting access to such content.
It remains uncertain whether the incoming administration will adopt a more lenient approach towards Big Tech companies, considering that the previous administration initiated several investigations into these entities. JD Vance, the incoming vice president, has expressed concerns regarding the influence these companies exert over public discourse.
Despite these concerns, Microsoft has previously benefited from policies implemented by the previous administration.
In 2019, the Pentagon awarded Microsoft a $10 billion cloud computing contract, despite widespread expectations that Amazon would secure the contract. Subsequently, Amazon alleged that the previous president exerted undue influence on military officials to divert the contract away from its Amazon Web Services division..