The U.S. Federal Trade Commission (FTC) has launched a wide-ranging antitrust investigation into Microsoft, examining its practices in software licensing, cloud computing, and artificial intelligence (AI), Reuters has reported. The move puts Microsoft under scrutiny for potentially abusing its market power, as competitors raise concerns over its business practices.

The probe, initiated by FTC Chair Lina Khan ahead of her anticipated departure in January, investigates allegations that Microsoft is leveraging its dominant position in productivity software and cloud computing to lock customers into its Azure platform. The FTC is reportedly examining whether Microsoft imposes punitive licensing terms that make it difficult for customers to transfer their data to rival platforms.

Additionally, the FTC is looking into Microsoft's practices in cybersecurity and AI products. The agency has already demanded detailed information from Microsoft regarding its operations, including its $650 million deal with AI startup Inflection AI and its role in the broader AI market.

Critics, including industry lobbying groups and rival tech companies like Google and Amazon, have accused Microsoft of using restrictive licensing practices to gain an unfair advantage. NetChoice, a lobbying organization that represents online firms, including Google and Amazon, criticized Microsoft's integration of AI tools into its Office and Outlook products and its restrictive cloud computing policies.

"Given that Microsoft is the world's largest software company, dominating in productivity and operating systems software, the scale and consequences of its licensing decisions are extraordinary," NetChoice said.

Google has also raised complaints, accusing Microsoft of charging a 400% markup for running Windows Server on competing cloud platforms and providing delayed and limited security updates.

The FTC's investigation of Microsoft adds another layer to the agency's ongoing scrutiny of Big Tech companies. While the FTC has launched antitrust cases against Facebook parent Meta, Apple, Amazon, and Google, Microsoft has largely avoided significant regulatory challenges in recent years. However, the new probe underscores concerns about the tech giant’s influence in emerging sectors such as cloud computing and AI.

The agency is reportedly examining Microsoft’s involvement in AI training and its integration of AI technologies into its products. This includes investigating whether Microsoft's practices stifle competition in the rapidly evolving AI market.

The future of the investigation remains uncertain as Donald Trump’s administration is set to take office. While the Trump administration aggressively pursued antitrust actions against Google and Meta during its first term, it remains unclear how the new administration will approach the Microsoft probe. Vice President-elect JD Vance has voiced concerns about Big Tech’s influence over public discourse, which could influence enforcement priorities.

Despite the potential for shifts in regulatory focus, ongoing investigations often continue across administrations. “Changes in administration can lead to evolving enforcement priorities and shifts in how aggressively certain types of conduct are scrutinized,” noted Andre Barlow, a lawyer with Doyle Barlow & Mazard.

Microsoft has previously benefited from Trump-era policies. In 2019, the Pentagon awarded Microsoft a $10 billion cloud computing contract, which Amazon had been widely expected to secure. Amazon later accused Trump of improperly pressuring military officials to steer the contract toward Microsoft.

Microsoft has so far declined to comment on the FTC’s investigation, leaving open questions about how it will respond to the allegations. The company has consistently denied claims of anti-competitive behavior.

As the FTC delves into Microsoft’s practices, the probe highlights the broader challenges of regulating Big Tech in rapidly evolving markets like cloud computing and AI. The outcome of the investigation could have significant implications not only for Microsoft but also for the tech industry at large, as regulators grapple with the influence of some of the world’s most powerful companies.

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