US FTC Intensifies Antitrust Investigation into Microsoft’s Operations

The US Federal Trade Commission (FTC) has initiated a formal antitrust investigation into Microsoft Corp., scrutinizing multiple aspects of its business, including cloud computing services, software licensing practices, cybersecurity offerings, and artificial intelligence (AI) products. This development marks an escalation in regulatory scrutiny as the FTC deepens its examination of how Microsoft’s business practices may affect competition in these critical and rapidly evolving sectors.

The investigation follows more than a year of informal interviews conducted by FTC officials with Microsoft’s competitors, business partners, and industry experts. These interviews helped the agency gather preliminary information about Microsoft’s market influence and business strategies. Building on this groundwork, the FTC has now crafted a comprehensive demand for information, often referred to as a Civil Investigative Demand (CID), which is essentially a subpoena for documents and data. According to sources familiar with the matter, the request is extensive, spanning hundreds of pages, and has been officially approved by FTC Chair Lina Khan.

The demand reportedly covers a broad range of topics, signaling the FTC’s intent to examine whether Microsoft’s practices in cloud computing and software licensing create barriers to competition. Microsoft’s dominance in enterprise software and cloud services, particularly through its Azure cloud platform and popular Office 365 suite, has long raised concerns about its ability to potentially stifle competitors by bundling services or imposing restrictive licensing terms.

In addition, the FTC is likely exploring Microsoft’s approach to cybersecurity and AI products. Microsoft’s growing influence in the AI market, particularly through its partnership with OpenAI and the integration of AI capabilities into products like Microsoft 365 and Azure, could be a focal point. Regulators may be investigating whether Microsoft’s AI and cybersecurity solutions give it an unfair advantage over smaller competitors by leveraging its existing dominance in other markets to cross-sell or bundle these new services.

FTC Chair Lina Khan’s involvement underscores the seriousness of the investigation. Khan, a prominent advocate for aggressive antitrust enforcement, has prioritized addressing the concentration of power in the tech industry. Under her leadership, the FTC has pursued high-profile cases against other major tech firms, and Microsoft’s growing presence in cloud computing, AI, and cybersecurity appears to have drawn similar attention.

This investigation comes at a time when Microsoft is already under scrutiny for other high-profile issues, including its acquisition of Activision Blizzard, which has faced regulatory challenges in the US and abroad. The FTC’s action signals that Microsoft’s broader business practices—not just individual mergers or acquisitions—are now under the microscope.

If the investigation progresses toward formal legal action, it could have significant implications for Microsoft’s business strategy, potentially leading to changes in how it licenses software, prices cloud services, or integrates AI and cybersecurity products. The outcome of this inquiry could also influence broader regulatory efforts in the tech industry, setting precedents for how companies with dominant positions in multiple markets are regulated. As of now, Microsoft has not publicly commented on the investigation, and it remains to be seen how the company will respond to the FTC’s sweeping request for information.