Microsoft faces broad antitrust investigation from U.S. FTC

After more than a year of informal interviews with competitors and business partners, antitrust officials have drafted a detailed request to force Microsoft to hand over information, according to people familiar with the matter. The request, hundreds of pages long, was sent to the company after FTC Chairwoman Lena Khan signed off on approval, one of the people said.

FTC antitrust lawyers are scheduled to meet with Microsoft’s competitors next week to gather more information about the Redmond, Wash.-based company’s business practices, according to two other people familiar with the plans who, like others, asked to remain anonymous to discuss a confidential matter. .

Microsoft and the Federal Trade Commission declined to comment.

The Federal Trade Commission’s (FTC) scrutiny of Microsoft’s cloud computing business has gained momentum after a series of cybersecurity incidents involving the company’s products. The company is a major government contractor, providing billions of dollars of software and cloud services to US agencies including the Department of Defense.

The request for information from Microsoft is one of Khan’s farewell shots as she steps down after leading one of the most aggressive campaigns against unified corporate power the agency has offered in decades. While business leaders hope that President-elect Donald Trump will usher in an era of relaxed regulation, it will fall to the new FTC chairman — who has not yet been named — to decide how to move forward on the issue.

The FTC investigation renews scrutiny of Microsoft’s business practices more than 25 years after the government sued the company over similar conduct that involved bundling the Windows operating system and browser and trying unsuccessfully to disassemble it.

A main focus of the current investigation is Microsoft bundling both its popular office productivity and security software with its cloud offerings, according to people familiar with the information request.

Microsoft’s cybersecurity failures, coupled with its heft as a government contractor, are viewed by the FTC as an example of the company’s problematic market power, these people said.

In a November 2023 report, the FTC highlighted concerns that the concentrated nature of the cloud market means that “service outages, or other issues that degrade a cloud provider’s service, could have a cascading effect on the economy or specific sectors.”

The CrowdStrike outage that affected millions of devices running Microsoft Windows systems earlier this year was a testament to the widespread use of the company’s products and how directly they impact the global economy.

Part of the investigation focuses on the company’s practices related to security software called Microsoft Entra ID — formerly known as Azure Active Directory — which helps authenticate users who log in to cloud-based software, some of the people said.

Rivals have complained that Microsoft’s licensing terms and bundling of software with cloud services make it difficult for rival authentication and cybersecurity companies to compete.

Companies like Slack and Zoom Communications Inc. said… Salesforce subsidiary Microsoft’s practice of giving away its Teams video conferencing software for free in a bundle with popular software products like Word and Excel is anti-competitive and makes it difficult for them to do so. compete.

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