The US Federal Trade Commission (FTC) has opened a new antitrust investigation against Microsoft. This new case focuses on its cloud services (Azure), its software licenses, its cybersecurity offerings and its artificial intelligence products, and comes shortly after a court ruled in favor of the Department of Justice in a similar case against Google.
The FTC has been conducting informal interviews with competitors and business partners for more than a year, and this week, antitrust authorities have already drafted a detailed request to force Microsoft to hand over information to them, according to sources cited by Bloomberg. The order, which consists of hundreds of pages, was approved by FTC Chair Lina Khan.
FTC antitrust lawyers plan to meet with Microsoft’s rivals next week to gather more information about the company’s business practices, in what may become the second major antitrust case which the firm founded by Bill Gates faces.
The ‘Crowdstrike case’
The FTC’s interest in Microsoft’s cloud business skyrocketed after the global blackout of Windows computers that occurred on July 19, due to a failed update by the company Crowdstrike. The fact that millions of companies around the world were affected, and that all US air traffic was practically paralyzed, triggered alerts from the regulatory agency, which He saw firsthand the effects of what he suspects is a monopoly. The company has multi-billion dollar contracts to sell software and cloud services to US ministries and agencies, and is a key player in the defense sector.
In a November 2023 report, the FTC already warned that the concentrated nature of the cloud computing market means that “Disruptions, or other technical problems, could have a cascading impact on the economy or on specific sectors“.
However, the key to the case may lie in product packaginga practice explicitly prohibited by US antitrust laws. In this case, Rivals such as Slack and Zoom denounce bundling of Teams conferencing software with Office productswhich pushes many companies to stay with the Microsoft program when purchasing access to Word or Excel.
Added to that security software called Microsoft Entra IDwhich helps authenticate users logging into cloud-based software. Their rivals consider that they hinder competition in the authentication and cybersecurity sector, because the majority of their users are going to stay with the one that comes by default.
This type of behavior is reminiscent of the lawsuit that was already presented by Bill Clinton’s Government in 1998 against Microsoft for bundling Internet Explorer and Windows Media Player on the Windows operating system, which caused the vast majority of users to use these programs without even considering comparing competing offers. The final ruling did not force the ‘cutting up’ of Microsoft, as the FTC wanted, but it did force the company to offer alternatives to users and not include its program by default.
The lawsuit is one of Khan’s parting gifts, who will leave office in a few months after leading one of the agency’s most aggressive campaigns against Big Tech in decades. The expectation is that President-elect Donald Trump will usher in an era of less regulation, and his new, as-yet-unnamed FTC chair will be the one to decide how to proceed with the case.
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