Microsoft Under FTC Scrutiny for Cloud, AI, and Licensing Practices

The U.S. Federal Trade Commission (FTC) has initiated a comprehensive antitrust investigation into Microsoft, focusing on its software licensing practices and dominance in the cloud computing market, according to sources familiar with the matter. This move marks an escalation in the regulatory scrutiny faced by the tech giant as it expands its influence in sectors like artificial intelligence (AI) and cybersecurity.

Scope of Investigation

The investigation, reportedly approved by FTC Chair Lina Khan ahead of her anticipated departure in January, aims to address concerns that Microsoft is leveraging its market power in productivity software to limit competition. Specifically, the FTC is examining allegations that the company imposes restrictive licensing terms that discourage customers from transferring data from its Azure cloud services to rival platforms.

According to Reuters, the probe also includes a review of Microsoft’s broader practices in AI and cybersecurity products. Complaints about Microsoft’s cloud computing practices have been ongoing, with critics claiming the company employs strategies designed to lock customers into its ecosystem.

NetChoice, a lobbying group representing companies such as Amazon and Google, has voiced concerns over Microsoft’s integration of AI tools into popular services like Office and Outlook, suggesting these practices disadvantage competitors in the cloud computing space.

Context of Increasing Antitrust Scrutiny

This inquiry into Microsoft stands out amid a broader wave of antitrust actions against major tech companies. While Meta, Apple, Amazon, and Google have faced significant legal challenges over accusations of monopolistic practices, Microsoft has largely avoided the same level of regulatory pressure. However, the FTC’s ongoing investigation may signal a shift in this trend.

Related: Elon Musk Expands OpenAI Suit, Adds Microsoft Over Antitrust Allegations

Microsoft is no stranger to antitrust probes. Earlier this year, the FTC claimed jurisdiction over investigations into Microsoft and OpenAI, particularly in relation to competition within the burgeoning AI sector. Additionally, Microsoft’s $650 million acquisition of AI startup Inflection AI has drawn regulatory interest.

Regulatory Uncertainty and Political Shifts

The timing of the investigation coincides with a period of political transition, as the election of Donald Trump to a second term as U.S. president raises questions about the future of antitrust enforcement. During Trump’s first administration, the government pursued significant antitrust actions against tech giants, including lawsuits against Google and Facebook. Yet some analysts believe the administration’s approach toward Microsoft could remain more business-friendly, given past policies favoring the company.

Microsoft has historically benefited from federal decisions under Trump’s leadership. In 2019, the Pentagon awarded the company a $10 billion cloud computing contract, a decision Amazon later contested, alleging improper influence from Trump administration officials.

Shifting Enforcement Priorities

Antitrust experts caution that changes in administration do not necessarily lead to the abandonment of ongoing investigations. Andre Barlow, a lawyer with Doyle Barlow & Mazard, emphasized that enforcement priorities often shift with political changes, potentially influencing how aggressively certain cases are pursued.

Even with this uncertainty, the FTC’s focus on Microsoft underscores its commitment to examining Big Tech’s role in stifling competition, particularly in emerging areas like AI and cloud computing.

Source: Reuters