Microsoft finds itself under the microscope again as the Federal Trade Commission of the United States launches an expansive investigation into its business practices. That includes cloud computing, software licensing, products related to cybersecurity, and services about artificial intelligence. The probe signals a return to intense regulatory scrutiny reminiscent of past attempts to break up the tech giant over two decades ago.
The investigation by the FTC has accelerated after more than a year of informal talks with rivals and industry colleagues. Formalized now, the agency has issued a detailed request for information to Microsoft, reportedly running into hundreds of pages, signed off by FTC Chair Lina Khan. In a bid to gather further insights, FTC lawyers are scheduled to meet with Microsoft’s competitors next week.
Central to the investigation is its bundling strategy, including how it has packaged the productivity software-such as Word, Excel, and Teams-along with its cloud and cybersecurity services. The company’s rivals, like Salesforce’s Slack and Zoom, have complained about the practice, saying it’s unfair and suppresses their chances to compete. Separately, Microsoft Entra ID-formerly known as Azure Active Directory-and given away with its cloud is being probed as well on the potential for stalling competition in cybersecurity.
Concerns about Microsoft’s cybersecurity practices, particularly as a large government contractor, have also emerged. A string of highly publicized cybersecurity incidents associated with Microsoft products has raised red flags about the risks of concentrated market power. For example, the CrowdStrike crash earlier this year involved millions of devices running on Microsoft Windows, indicating the vulnerabilities within such a dominant ecosystem.
FTC officials have voiced concerns that the concentration in the cloud computing market has the potential to create significant risks to the broader economy. A report published in November 2023 showed that outages or degraded services from major providers such as Microsoft could lead to cascading effects across industries, deepening concerns over reliance on a few dominant players.
This investigation represents a pivotal move by Lina Khan, who has championed a rigorous approach against corporate consolidation during her tenure at the FTC. With a new administration led by President-elect Donald Trump on the horizon, the future of regulatory priorities remains uncertain. Business leaders expect a potentially lighter regulatory approach, but the decision to advance this case will rest with Trump’s yet-to-be-appointed FTC Chair.
The renewed scrutiny of Microsoft’s business practices shines a light on ongoing concerns about its influence in the technology industry. As the investigation unfolds, its results could have wide ramifications for competition in cloud computing, software licensing, and cybersecurity, possibly altering the trajectory of technology for a generation.
