Microsoft’s Cybersecurity Bundles Draw Antitrust Inquiry

The Federal Trade Commission (FTC) has intensified its antitrust probe into Microsoft, requesting extensive information and interviewing competitors, according to ProPublica. The investigation examines whether Microsoft’s business practices violated federal law, particularly in the context of bundling software licenses and cybersecurity services.

Bundling Tactics and Federal Impact

The scrutiny stems from actions Microsoft undertook after a series of cyberattacks heightened the need for robust cybersecurity across federal agencies. ProPublica reports that Microsoft offered to upgrade existing software bundles for free temporarily, integrating advanced cybersecurity features into packages that included widely used products such as Word, Outlook, and Excel. Alongside these upgrades, the company provided consultants to facilitate installation. This arrangement was embraced across large portions of the federal government, including all branches of the Defense Department.

Related: Microsoft Demands FTC Investigation into Alleged Antitrust Probe Leak

Once the free trial period ended, agencies began paying for the upgraded services, effectively locking them into the Microsoft ecosystem. Former sales leaders involved in the initiative likened this strategy to a “free sample” approach, designed to ensure long-term dependency on Microsoft’s products. This tactic, according to ProPublica, displaced existing cybersecurity providers and reduced market opportunities for competitors like Amazon Web Services, as agencies transitioned to Microsoft’s Azure cloud platform.

Legal Concerns and Internal Scrutiny

Experts cited by ProPublica have raised questions about whether these practices adhered to federal regulations governing contracting and competition. The bundling and subsequent dominance in the federal market may have undermined competitive fairness, potentially violating antitrust laws. Notably, the report highlighted that even some of Microsoft’s legal advisors expressed concerns about the deals’ compliance with antitrust regulations.

Industry and Regulatory Implications

Microsoft’s practices not only raised alarms among competitors but also drew attention to the broader implications for market competition in the technology sector. The FTC’s investigation signals a growing focus on the competitive landscape shaped by dominant tech companies. If violations are substantiated, this could lead to significant regulatory actions and reforms.

Source: ProPublica