Microsoft faces a broad antitrust investigation by the U.S. FTC covering cloud computing, cybersecurity, AI, and more

According to the Zhitong Finance APP, the U.S. Federal Trade Commission (FTC) has launched an antitrust investigation into Microsoft (MSFT.US), covering various aspects from the company's cloud computing and software licensing business to cybersecurity products and artificial intelligence products. According to informed sources, after more than a year of informal interviews with competitors and business partners, the antitrust enforcement agency has drafted a detailed request for Microsoft to provide information. One of the sources said that FTC Chair Lina Khan signed the hundreds of pages long request and sent it to the company.

According to two other informed sources, FTC antitrust lawyers will meet with Microsoft's competitors next week to gather more information about Microsoft's business practices. Both Microsoft and the FTC declined to comment.

Following a series of cybersecurity incidents involving Microsoft products, the FTC has intensified its scrutiny of Microsoft's cloud computing business. The company is a major government contractor, providing billions of dollars in software and cloud services to U.S. agencies, including the Department of Defense.

The request for information from Microsoft is a final act before Khan's departure. She previously led one of the most aggressive actions against corporate power concentration in decades. While business leaders hoped that President Donald Trump would usher in an era of looser regulation, the decision on how to handle this case will fall to his newly appointed FTC chair (yet to be appointed).

The FTC's investigation revisits Microsoft's business practices over the past 25 years. Previously, the U.S. government had sued Microsoft for similar practices of bundling the Windows operating system with its browser but failed to successfully break up the company.

According to informed sources, one focus of the current investigation is Microsoft's bundling of its widely popular office productivity and security software with its cloud services.

These sources said that Microsoft's missteps in cybersecurity, combined with its importance as a government contractor, are seen by the FTC as an example of the company's problematic power in the market.

In a report in November 2023, the FTC emphasized concerns about the concentrated nature of the cloud market, indicating that "disruptions or other issues that lower the service levels of cloud providers could have a ripple effect on the economy or specific industries."

Earlier this year, the collapse of CrowdStrike (CRWD.US) affected millions of devices using Microsoft Windows, demonstrating the widespread use of the company's products and its direct impact on the global economy.

Some informed sources said that part of the investigation focuses on Microsoft's practices related to the security software Microsoft Entra ID (formerly known as Azure Active Directory), which helps authenticate users logging into cloud software.

Competitors have complained that Microsoft's licensing terms and its practice of bundling software with cloud services make it more difficult for other certification and cybersecurity companies to compete.

Companies like Slack, a subsidiary of Salesforce (CRM.US), and Zoom Communications (ZM.US) have stated that Microsoft's practice of bundling its Teams video conferencing software with popular software like Word and Excel for free is anti-competitive, making it harder for them to compete