The Federal Trade Commission (FTC) has initiated a broad antitrust investigation into Microsoft's business practices, with a particular focus on how the tech giant bundles its Office products with cybersecurity and cloud computing services.
The investigation comes after concerns about Microsoft's market dominance and its strategy of packaging popular software products together. FTC attorneys have begun interviewing Microsoft's competitors and examining the company's bundling practices, particularly in relation to federal government contracts.
At the center of the probe is Microsoft's 2021 initiative where it offered free upgrades to federal agencies, combining basic Office licenses with advanced cybersecurity features and cloud services. After the trial period, agencies continued paying for these enhanced services, effectively becoming dependent on Microsoft's ecosystem.
The investigation also scrutinizes Microsoft's Entra ID (formerly Azure Active Directory) identity management tool and its role in the company's broader cloud strategy.
This probe follows a series of concerns about Microsoft's market power, including its handling of security vulnerabilities. The FTC's interest was particularly piqued by how Microsoft maintained and expanded its federal contracts despite security lapses, including those exposed during the SolarWinds cyber attack.
The tech giant has received a civil investigative demand from the FTC, requiring the company to provide detailed information about its practices. Microsoft has confirmed receiving this document but describes it as "broad, wide ranging" and questions some of its logical basis.
This investigation marks one of FTC Chair Lina Khan's final major actions and follows the agency's broader examination of cloud computing providers' business practices in 2023. The probe's future direction will be determined by the incoming FTC leadership.
Microsoft maintains that its federal contract strategies were designed to support government security needs and were "structured to avoid antitrust concerns." However, critics, including Senator Ron Wyden, argue that increased antitrust scrutiny of Microsoft is necessary.
This investigation echoes Microsoft's previous antitrust battles, particularly the landmark Department of Justice case from two decades ago that nearly led to the company's breakup. The outcome of this new probe could have far-reaching implications for how tech companies package and sell their services.