The Federal Trade Commission is investigating Microsoft for potentially exclusionary practices in cloud computing and artificial intelligence, The Verge reported Sunday, citing documents it obtained. The probe, which began in 2024 under the Biden administration and continued under President Donald Trump, could lead to the company's first major antitrust lawsuit since the landmark 1998 case that accused it of illegally monopolizing the PC operating system market. "We are cooperating fully with the FTC and believe our practices promote competition," Microsoft spokesperson Alex Haurek said.
The FTC sent civil investigative demands — essentially subpoenas — to at least half a dozen companies that compete with Microsoft, Bloomberg first reported earlier this year. New details from those letters, obtained by The Verge from an industry source who reviewed them and was granted anonymity to speak on nonpublic information, reveal the agency's specific focus. The documents span more than 15 pages and include over 15 questions with extensive sub-parts.
Investigators want to know about Microsoft's business agreements, licensing arrangements, and product interoperability. The goal, according to the source, is determining whether Microsoft used unfair methods of competition in cloud services, software products, and related services in violation of the FTC Act. The FTC declined to comment.
The probe targets a familiar complaint. Customers have alleged — often anonymously for fear of retaliation — that Microsoft's 2019 licensing changes made it significantly more expensive to run Windows software on infrastructure outside of its Azure cloud. Google amplified those concerns in 2023, responding to a broad FTC inquiry by accusing Microsoft of using dominance in other areas to "give their own cloud products an unearned advantage" and lock in consumers.
Haurek pushed back on that characterization. He pointed to Google as "a clear example of that dynamic — growing 63% year over year and competing head-to-head with other major providers including AWS, the largest cloud provider." Microsoft insists the cloud sector has never been more competitive. A 2024 ProPublica investigation added another dimension to the concerns.
It found Microsoft used similar leveraging tactics to gain a foothold across US government agencies. The company installed free cybersecurity upgrades that came with products specifically running on Azure. Switching away later proved strenuous.
Government contracts and cybersecurity were not among the CID topics disclosed to The Verge. Haurek said Microsoft responded to the government's security requests at the time and that agencies were "free to engage with other vendors."
The FTC's questions go beyond cloud computing. The agency asks about competition around AI products, including competing for customers against businesses that combine extra features or services with an AI or software product like Microsoft 365. The references to AI suggest the FTC considers it a potential part of an illegal tying arrangement or an important competitive advantage, according to George Washington University law professor and former FTC Chair William Kovacic.
Some CID questions seem aimed at understanding the cloud industry itself. They ask about company organizational charts, business and marketing plans, and product roadmaps. The FTC wants details on plans for bundling multiple features and products, as well as pricing, discounting, and profitability.
Other questions probe how difficult it is to break into a market where Microsoft operates, asking about costs and barriers to entry. The agency specifically solicits documents that speak to the impact of Microsoft's policies or market position. It also asks about overall industry bundling and interoperability practices.
This kind of information gathering tends to occur at earlier stages of an investigation, Kovacic said. No minority party commissioners would be present to object or publicize the choice. There is no guarantee the investigation will result in a legal complaint.
FTC staff will choose whether to recommend filing one after further investigative steps. The agency's two commissioners would then take a vote. Microsoft's cloud growth has been extraordinary.
It helped push the company's valuation to historic highs and positioned it to handle the massive computing requirements of AI. Cloud revenue has buoyed the company's bottom line while hardware including Xbox experienced declines. As a $3 trillion company, it is "almost inevitable" for Microsoft to become a target of third-party antitrust complaints, Kovacic said.
The US is not alone in scrutinizing Microsoft's cloud business. The European Commission, UK Competition and Markets Authority, and Japan Fair Trade Commission have all been investigating Microsoft's cloud services within the last year. Haurek said Microsoft is "committed to working quickly and constructively with the CMA" on its review and is also cooperating with the investigations in Europe and Japan.
So far, Microsoft has largely dodged the breakup calls that have reverberated through political campaigns and the halls of Congress. Google, Meta, Amazon, and Apple have all faced more severe threats. Microsoft's business-focused offerings helped it avoid child safety and moderation fights that create political enemies.
Kovacic credits Microsoft's adaptation after its earlier monopolization case, saying it is generally regarded in the industry as "having the best compliance program" and "the best approach to dealing with the regulators."
The 1998 case looms over the current probe. The Department of Justice accused Microsoft of illegally tying its dominant Windows operating system to its Internet Explorer browser, boxing out competitors. A court ruled against Microsoft.
The government ultimately settled, allowing the company to avoid a breakup. The case is often credited with reining in Microsoft and allowing then-nascent firms like Google to flourish. A new case against Microsoft could reshape the AI industry.
A handful of companies are vying for market share. Even when tech companies prevail, antitrust suits can require years of litigation and put internal business operations under a microscope. None so far have resulted in a breakup.
But Apple and Google are both under court orders that restrict anticompetitive business practices. Apple and Amazon's trials have yet to take place. Kovacic said it is really the totality of tech antitrust cases that could tip the scales. "The direction of the entire information services sector is going to depend on the resolution of this very large number of pending cases and investigations involving Big Tech," he said.
What this actually means for your family. The policy says one thing. The reality says another.
If the FTC finds Microsoft illegally boxed out cloud competitors, businesses that rely on cloud services could eventually see more choices and lower prices. But antitrust cases move slowly. The 1998 Microsoft case took years to resolve.
Any impact on the market would likely take even longer. Both sides claim victory. Here are the numbers.
Microsoft points to Google's 63% year-over-year cloud growth as proof of a healthy market. Critics point to the anonymous complaints from customers who say they cannot afford to run Windows software outside of Azure. The FTC will have to decide which narrative the evidence supports. - The FTC is investigating Microsoft for potentially exclusionary cloud licensing practices and AI bundling, using civil investigative demands sent to at least six competitors. - Microsoft has largely avoided the antitrust spotlight that has fallen on Google, Meta, Amazon, and Apple, partly due to its business-focused offerings and compliance reputation. - The European Commission, UK CMA, and Japan Fair Trade Commission are all conducting parallel investigations into Microsoft's cloud services.
Why It Matters: A Microsoft antitrust lawsuit would mark the first major US action against the company since the 1998 case that reshaped the tech industry. That case is widely credited with creating space for Google and other startups to grow. A new case targeting cloud and AI bundling could similarly determine which companies dominate the next era of computing — and whether businesses get real choice in where they run their software.
The FTC staff will now gather documents and testimony from the companies that received the civil investigative demands. After completing their investigation, they will decide whether to recommend filing a legal complaint. If they approve a lawsuit, Microsoft could face years of litigation that puts its cloud and AI business practices under a microscope.
Watch for whether the all-Republican commission chooses to pursue a case that began under Democratic leadership — or lets it quietly fade away.
Key Takeaways
— - The FTC is investigating Microsoft for potentially exclusionary cloud licensing practices and AI bundling, using civil investigative demands sent to at least six competitors.
— - The probe began in 2024 under the Biden administration and has continued under President Trump's all-Republican commission, which could still vote to end it without filing a complaint.
— - Microsoft has largely avoided the antitrust spotlight that has fallen on Google, Meta, Amazon, and Apple, partly due to its business-focused offerings and compliance reputation.
— - The European Commission, UK CMA, and Japan Fair Trade Commission are all conducting parallel investigations into Microsoft's cloud services.
Source: The Verge
