Written by Jody Godoy
(Reuters) – The U.S. Federal Trade Commission has initiated a comprehensive antitrust investigation into Microsoft (NASDAQ:), focusing on its software licensing and cloud computing operations, according to a source familiar with the situation on Wednesday.
The investigation was given the green light by FTC Chair Lina Khan before her expected departure in January. With the election of Donald Trump as U.S. president and the anticipation of a more lenient approach towards businesses by his administration, the outcome of the investigation remains uncertain.
The FTC is looking into allegations that the tech giant may be leveraging its market dominance in productivity software by imposing restrictive licensing terms to hinder customers from transferring their data from its Azure cloud service to other competitive platforms, as confirmed by sources earlier this month.
Additionally, the FTC is examining Microsoft’s practices related to cybersecurity and artificial intelligence products, as disclosed by the source on Wednesday.
Microsoft declined to provide a comment on the matter on Wednesday.
Rivals have criticized Microsoft for practices they claim lock customers into its cloud offering, Azure. The FTC received such complaints last year during its evaluation of the cloud computing market.
NetChoice, a lobbying group representing online companies including Amazon and Google, competitors to Microsoft in cloud computing, condemned Microsoft’s licensing policies and its integration of AI tools into Office and Outlook.
“Given Microsoft’s position as the world’s largest software company, dominating in productivity and operating systems software, the impact of its licensing decisions is significant,” the group stated.
In September, Google lodged a complaint with the European Commission regarding Microsoft’s practices, alleging that customers were charged a 400% mark-up to continue using Windows Server on rival cloud computing platforms, with delayed and limited security updates.
The FTC has requested a wide range of detailed information from Microsoft, as reported by Bloomberg earlier on Wednesday.
The agency had already taken on investigations into Microsoft and OpenAI concerning AI competition and had started examining Microsoft’s $650 million deal with AI startup Inflection AI.
Microsoft has stood out as an exception to recent U.S. antitrust regulators’ actions against alleged anticompetitive practices of Big Tech companies.
Meta Platforms (NASDAQ:), Apple (NASDAQ:), and Amazon.com Inc (NASDAQ:) have all faced accusations of unlawfully maintaining monopolies.
Google (NASDAQ:) is currently facing two lawsuits, one of which found it unlawfully impeding competition among online search engines.
During Google’s trial, Microsoft CEO Satya Nadella testified that the search giant used exclusive deals with publishers to control content used for AI training.
It remains uncertain whether the new administration under Trump will relax its stance on Big Tech, as the previous administration had launched several probes. Incoming vice president JD Vance has expressed concerns about the companies’ influence over public discourse.
“The Trump administration was vigorous in enforcing antitrust laws,” stated Andre Barlow, a lawyer at Doyle Barlow & Mazard, highlighting lawsuits filed against Google and Facebook.
“When administrations change, ongoing investigations may not be dropped,” he added, noting that “changes in administration can lead to evolving enforcement priorities and shifts in the scrutiny of certain conduct.” However, Microsoft has previously benefitted from Trump’s policies.
In 2019, the Pentagon awarded Microsoft a $10 billion cloud computing contract that Amazon was expected to win. Amazon later alleged that Trump had exerted improper influence on military officials to steer the contract away from its Amazon Web Services unit.