Microsoft Faces Antitrust Challenge as FTC and Global Regulators Turn Up the Heat

The U.S. Federal Trade Commission (FTC) is poised to initiate an antitrust investigation into Microsoft's cloud computing business. This move reflects the regulatory body's broader effort to scrutinize the practices of major technology firms during the concluding weeks of President Joe Biden's administration. The FTC is examining claims that Microsoft employs unfair licensing terms to lock customers into its Azure cloud infrastructure, making it challenging for them to switch to competitors.

Accusations suggest that Microsoft's dominant Windows Server and Microsoft Office products are used strategically to bind users to its platform. Customers reportedly face prohibitive costs when attempting to transition to rival cloud services, though no technical barriers exist. Under scrutiny are Microsoft's high exit fees, increased subscription charges for departing users, and the alleged incompatibility of its Office 365 offerings with competing cloud products.

Although the FTC has not yet formally requested documentation from Microsoft, this investigation marks Chair Lina Khan's continued crackdown on the monopolistic tendencies of large tech companies, targeting firms such as Meta and Amazon. While Khan has been a formidable figure against these corporate giants, her term might end with the anticipated change in presidential administration.

Further pressure on Microsoft's cloud operations is building internationally. The UK's Competition and Markets Authority (CMA) is conducting a simultaneous investigation into Microsoft and Amazon, fueled by concerns from the communications regulator Ofcom about market competition distortion. These include reports that customers are challenged by prohibitive exit fees and preferential discounts attached to native cloud services.

In the European Union, Microsoft's proactive engagement with the European cloud computing industry trade association CISPE resulted in a multi-million-dollar settlement in July, allowing it to stave off a formal investigation by EU regulators.