Is Another Tech Giant About to Face the FTC’s Wrath?

The U.S. Federal Trade Commission (FTC) has launched a comprehensive antitrust investigation into Microsoft Corp. (MSFT), focusing on a wide array of the company’s operations, from cloud computing and software licensing to cybersecurity and artificial intelligence products. This probe, as reported by Bloomberg, marks a significant uptick in scrutiny for Microsoft, revisiting themes of corporate power and market practices not seen since the landmark antitrust case over 25 years ago when the government attempted to break up the company over its bundling practices with Windows.

The publication notes that this investigation comes after more than a year of informal discussions with Microsoft’s competitors and business partners, leading to a voluminous information demand sent to Microsoft, approved by FTC Chair Lina Khan. This document, hundreds of pages long, seeks detailed insights into Microsoft’s business strategies, particularly how it bundles its popular office productivity tools and security software with cloud services. This bundling, critics argue, stifles competition by making it difficult for rivals in authentication and cybersecurity to gain market share.

The focus on Microsoft’s cloud computing business was intensified by recent cybersecurity incidents involving its products. Microsoft, a major supplier to the U.S. government, including the Defense Department, has come under the lens for potential market dominance and the implications of its cybersecurity practices on the broader economy. A notable example was the CrowdStrike (CRWD) crash impacting millions of Windows devices, highlighting the systemic risks of relying heavily on one company’s infrastructure.

Particular attention is being paid to Microsoft Entra ID (formerly Azure Active Directory), which manages user authentication in cloud environments. Competitors have voiced concerns over Microsoft’s licensing practices, which they claim create barriers to entry and competition in the cybersecurity space.

The investigation also touches on Microsoft’s integration of Teams with its productivity suite, a practice that companies like Salesforce’s Slack and Zoom argue gives Microsoft an unfair competitive edge by offering Teams for free alongside products like Word and Excel.

As Lina Khan prepares to step down, this investigation could be one of her last major actions at the FTC, known under her leadership for aggressive antitrust enforcement. With Donald Trump’s election victory, there’s speculation about a shift towards less stringent regulation, but the ultimate direction of this investigation will hinge on the policies of the incoming FTC chair.

This renewed scrutiny of Microsoft’s practices not only revisits past concerns about market dominance but also reflects current worries about the health of competition in critical sectors like cloud computing and cybersecurity, where Microsoft’s influence is profound.

Reference: Bloomberg

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