The Federal Trade Commission has launched a broad investigation into Microsoft's business practices, examining potential antitrust violations related to how the tech giant bundles its products and services, according to sources close to the matter.
At the center of the probe is Microsoft's strategy of packaging its popular Office software with cybersecurity and cloud computing offerings. The investigation follows concerns about how the company expanded its federal government contracts by offering free temporary upgrades that included advanced security features bundled with its existing software licenses.
The FTC's attorneys have begun interviewing Microsoft's competitors and issued a civil investigative demand - the agency's version of a subpoena - requiring Microsoft to provide information. While Microsoft has confirmed receiving the document, company spokesperson David Cuddy called the demands "broad" and questioned their logic, without providing specifics.
The investigation examines how Microsoft's bundling practices potentially pushed out competing cybersecurity vendors and cloud providers like Amazon Web Services. Former Microsoft sales leaders compared the strategy to offering free samples to create dependency, noting that government agencies would effectively become locked into the upgraded services once implemented.
The probe also scrutinizes Microsoft's identity management product Entra ID (formerly Azure Active Directory) and the company's handling of security vulnerabilities. Of particular interest is Microsoft's response to the SolarWinds hack, where Russian state-sponsored attackers exploited a known weakness in Microsoft's products to breach sensitive government systems.
This is not Microsoft's first encounter with antitrust regulators. In a landmark case over two decades ago, the Department of Justice sued Microsoft over monopolistic practices in the operating system market, resulting in a settlement that restricted certain software development and licensing practices.
The investigation's future direction may shift under new FTC leadership, as President-elect Trump has announced plans to appoint Commissioner Andrew Ferguson as chair, along with antitrust attorney Mark Meador as commissioner.
Microsoft maintains that its federal contract strategy was designed to support urgent government security needs and was "structured to avoid antitrust concerns."