FTC Plans Investigation Into Microsoft Cloud Business

Microsoft’s cloud business practices are reportedly facing a potential anti-competitive investigation by the FTC

A US federal regulator is reportedly planning an investigation into Microsoft’s cloud computing business, in what could be one of the last acts of the outgoing Biden Administration, before Donald Trump takes over in January 2025.

Reuters, citing sources familiar with the matter, reported that the US Federal Trade Commission (FTC) is preparing to launch an investigation into anti-competitive practices at Microsoft’s cloud computing business.

The Financial Times first reported on the possible FTC investigation.

FTC investigation?

It was back in March 2023 when the FTC issued a request for comment about potentially anti-competitive acts in the cloud industry.

In June 2023 Alphabet’s Google responded to the request by the US antitrust regulator about anti-competitive practices in the cloud market.

Google in a letter to the FTC, had accused Microsoft of anti-competitive practices in its Azure cloud unit.

Google apparently singled out Microsoft in the letter, arguing that through its dominant Windows Server and Microsoft Offices products, Redmond can make it difficult for its clients to use anything but its Azure cloud infrastructure offering.

Google described Microsoft’s licensing restrictions as a “complex web” that prevents businesses from diversifying their enterprise software vendors.

Google also reportedly said that such control represents a significant national security and cybersecurity risk.

The Cloud market is certainly crowded, but the Google Cloud has languished in third place in the cloud space, behind market leaders Amazon AWS and Microsoft Azure.

Now the FTC is examining allegations that Microsoft is potentially abusing its market power in productivity software by imposing punitive licensing terms to prevent customers from moving their data from its Azure cloud service to other competitive platforms, the sources told Reuters.

Tactics being examined include substantially increasing subscription fees for those that leave, charging steep exit fees and allegedly making its Office 365 products incompatible with rival clouds, according to the report.

The FTC declined to comment, while Microsoft did not immediately respond to Reuters’ requests for comment.

Donald Trump

Silicon UK has previously noted that victory of Donald Trump in the US Presidential election  may likely have a notable impact on the tech sector – and its regulation.

The current head of the FTC, which enforces the US’s antitrust laws, is headed up by a Biden appointee, namely Lina Khan.

Khan has been zealous in her interpretation of antitrust whilst at the federal agency and has been an aggressive enforcer against a number of Big Tech firms.

There is speculation that Trump will replace Khan as soon as possible, and opt for lighter regulatory oversight on the tech sector.

And Trump’s appointment this week of Elon Musk and former presidential candidate Vivek Ramaswamy to head up the non-governmental ‘Department of Government Efficiency’ (Doge) could play a role as well.

Musk has previously stated the goal to reduce government spending by $2 trillion, and as well dramatically reduce the amount of regulation facing businesses.