The Federal Trade Commission (FTC) is investigating Microsoft to determine if its business practices violate antitrust laws. The inquiry focuses on whether Microsoft’s bundling of its popular software products, such as Office, with other services like cybersecurity and cloud computing, harms competition. In recent weeks, FTC attorneys have been meeting with Microsoft competitors to gather information on this practice, which has raised concerns about the company’s influence in the market.
One of the key issues under investigation is Microsoft’s approach to the U.S. government. Starting in 2021, Microsoft began offering federal agencies free upgrades to its cybersecurity services, including consulting to help with installation, following a series of significant cyberattacks. This offer was accepted by many federal agencies, including military branches, which began paying for the enhanced services once the trial period ended. Critics argue that this strategy effectively locked federal agencies into Microsoft’s ecosystem, undermining competition from other cybersecurity and cloud service providers.
Some experts believe that Microsoft’s actions could be a violation of laws designed to regulate government contracting and competition, as the company’s offers displaced competitors in the cybersecurity and cloud markets. There have also been concerns that Microsoft used these tactics to secure long-term government contracts, pushing out companies like Amazon Web Services and others. Despite these concerns, Microsoft insists that its actions were aimed at improving the cybersecurity of federal agencies facing persistent threats from nation-state actors.
FTC Investigates Microsoft’s Bundling Strategy and Antitrust Concerns Over Cybersecurity and Cloud Practices
In addition to its bundling strategy, the FTC is examining Microsoft’s role in the SolarWinds cyberattack, in which hackers exploited a vulnerability in the company’s software to gain access to sensitive government data. Microsoft was reportedly aware of the flaw years before the attack but did not address it, fearing that doing so would disrupt customers and harm its competitive position. This decision has raised further questions about Microsoft’s market power and its prioritization of business interests over security.
Another area of focus for the FTC is Microsoft’s identity management product, Entra ID (formerly Azure Active Directory), which is a key part of its cloud strategy. The FTC is concerned that Microsoft’s market dominance in cloud computing and cybersecurity is stifling competition and creating an unfair advantage, particularly as the company continues to expand its federal business while leaving government systems vulnerable to cyberattacks.
The FTC’s investigation of Microsoft is not the first time the company has faced scrutiny over its business practices. In the late 1990s, the Department of Justice filed an antitrust lawsuit against Microsoft, accusing the company of using its monopoly in the operating system market to stifle competition. The case resulted in a settlement, but experts suggest that the current investigation into Microsoft’s actions mirrors many of the issues raised in the earlier case, including concerns about monopolistic behavior.
To support its investigation, the FTC has issued a civil investigative demand to Microsoft, compelling the company to provide detailed information about its business practices. Microsoft has criticized the broad nature of the request, calling it unreasonable, but the investigation appears to be intensifying. The outcome of this investigation could have significant implications for Microsoft and its future business operations, particularly as the FTC continues to examine the competitive practices of cloud computing providers more broadly.
