The U.S. Federal Trade Commission (FTC) is conducting an antitrust investigation into Microsoft (MSFT, Financial), focusing on its cloud computing, software licensing, cybersecurity, and artificial intelligence products. This follows over a year of informal interviews with Microsoft's competitors and business partners. FTC Chair Lina Khan has signed a detailed information request sent to Microsoft, aiming to gather more data on the company's business conduct.
The FTC's scrutiny of Microsoft's cloud services has intensified after several cybersecurity incidents involving its products. As a major government contractor, Microsoft provides billions of dollars in software and cloud services to U.S. agencies, including the Department of Defense. The information request is seen as one of Khan's final moves before her departure, reflecting her aggressive stance against corporate power consolidation.
The investigation revisits Microsoft's business practices from over 25 years ago when the U.S. government unsuccessfully attempted to break up the company for bundling its Windows operating system with its browser. Currently, the focus is on Microsoft's bundling of popular productivity and security software with its cloud services. The FTC views Microsoft's cybersecurity lapses and its role as a government contractor as indications of problematic market power.
A November 2023 FTC report highlighted concerns about the concentrated nature of the cloud market, suggesting that disruptions could have widespread economic impacts. Earlier this year, a CrowdStrike failure affected millions of devices using Microsoft's Windows system, underscoring the company's significant global economic influence.
The investigation also examines Microsoft's practices related to its security software, Microsoft Entra ID, which aids in user authentication for cloud software access. Competitors have complained about Microsoft's licensing terms and bundling practices, which they argue hinder competition for authentication and cybersecurity companies. Companies like Slack and Zoom Communications have criticized Microsoft for bundling its Teams video conferencing software with popular programs like Word and Excel, claiming it stifles competition.
