The U.S. Federal Trade Commission (FTC) has launched an antitrust investigation into Microsoft, focusing on its software licensing and cloud computing businesses.
The investigation includes allegations of Microsoft abusing market power in productivity software to restrict competition in cloud services like Azure, Reuters news report said. Microsoft Azure is the second largest Cloud service in the world.
Key Concerns
Punitive Licensing Terms: Microsoft is accused of imposing terms that make it difficult for enterprise customers to switch from Azure to other platforms.
Cybersecurity & AI Practices: The FTC is examining how Microsoft’s cybersecurity and artificial intelligence products impact competition.
Competitors’ Criticism
Google & NetChoice: Complaints highlight Microsoft’s alleged restrictive licensing policies, such as higher costs (e.g., a 400 percent markup for running Windows Server on rival clouds) and delayed security updates for non-Azure users.
Integration of AI Tools: Competitors have raised concerns about Microsoft’s use of AI in products like Office and Outlook.
FTC’s Investigation Scope
The agency has demanded detailed information on Microsoft’s practices and previously reviewed complaints about the cloud computing market.
The investigation extends to Microsoft’s $650 million deal with AI startup Inflection AI and other AI-related ventures.
Wider Antitrust Context
Microsoft has largely avoided the intense scrutiny faced by other Big Tech companies like Meta, Apple, Amazon, and Google.
Google has accused Microsoft of anti-competitive practices in the European Commission, focusing on cloud service costs and limited updates.
Political Connection
FTC Chair Lina Khan approved the probe ahead of her expected departure in January.
The election of Donald Trump as the next President of United States may influence the investigation’s outcome, with potential shifts in regulatory focus under his administration.
Historical Background
Microsoft has benefited from past government decisions, such as winning a $10 billion Pentagon contract in 2019, despite Amazon’s allegations of improper political influence.
Ongoing Developments
The FTC investigation marks a significant challenge for Microsoft as scrutiny over Big Tech practices intensifies globally. Further outcomes will likely depend on shifts in political leadership and regulatory priorities.
Microsoft’s revenue for the 2024 fiscal year is expected to be over $245 billion. Microsoft’s cloud business is a key part of its success, contributing significantly to its revenue. In Q1, FY25, Microsoft’s cloud revenue was $38.9 billion (up 22 percent).
Baburajan Kizhakedath
