Microsoft Emerges as Next Big Tech Antitrust Target

For years, Microsoft has largely sidestepped the antitrust fire that has engulfed its Big Tech peers, skillfully avoiding the populist calls to break up Silicon Valley giants. However, a Federal Trade Commission (FTC) investigation suggests that era of relative peace may be coming to an end.

Earlier this year, Bloomberg reported on civil investigative demands (CIDs),essentially subpoenas,that the FTC sent to at least half a dozen Microsoft competitors. Now, new details obtained by The Verge paint a clearer picture of the agency’s focus. The FTC appears particularly concerned with potentially exclusionary behavior surrounding Microsoft’s Azure cloud services and its growing role in the artificial intelligence (AI) industry.

There is no certainty that this probe, which began under President Biden in 2024 and has continued under President Trump, will result in a formal complaint. FTC staff will first gather more evidence before deciding whether to recommend one, and the two commissioners will vote. But if a lawsuit is approved, Microsoft could find itself back in the regulatory crosshairs it faced more than two decades ago, when a court ruled it held an illegal monopoly in PC operating systems.

The Verge obtained previously unreported information about these CIDs from an industry source who reviewed the documents on condition of anonymity. The source says the letters span more than 15 pages each, containing over 15 questions with extensive sub-parts. They probe Microsoft’s business agreements, licensing arrangements, and product interoperability, aiming to uncover whether the company has used unfair methods of competition in cloud computing, software, and related services, violating the FTC Act.

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The FTC has not responded to a request for comment. Microsoft spokesperson Alex Haurek stated that the company is “cooperating fully with the FTC and believe our practices promote competition while delivering the innovative products our customers expect.”

Customer complaints,often filed anonymously for fear of retaliation,allege that a 2019 change to Microsoft’s licensing terms made it significantly more expensive to run Windows software on infrastructure outside Azure. In 2023, Google responded to a broader FTC inquiry by accusing Microsoft of using its dominance in other areas to “give their own cloud products an unearned advantage” and lock in customers. Microsoft counters that the cloud sector is highly competitive, with Haurek pointing to Google’s 63% year-over-year growth as proof.

Microsoft’s cloud growth has helped push its valuation to historic highs, surpassing $3 trillion. A 2024 ProPublica investigation found that Microsoft used similar leveraging to gain a foothold across US government agencies, installing free cybersecurity upgrades that tied agencies to Azure, making future switches difficult. (Government contracts and cybersecurity were not among the CID topics disclosed to The Verge, and Haurek says agencies were “free to engage with other vendors.”)

According to George Washington University law professor and former FTC Chair William Kovacic, this type of information gathering typically occurs early in an investigation. The two-member, all-Republican commission could quietly end the probe without filing a complaint, with no minority party commissioners to object or publicize the decision.

The CID questions ask specifically about Microsoft’s impact on competition. They request details on company organizational charts, business and marketing plans, product roadmaps, bundling strategies, pricing, discounting, and profitability. Other questions probe the challenges of entering markets where Microsoft operates, including costs and barriers to entry. The FTC also seeks documents that speak to the impact of Microsoft’s policies or market position, as well as industry bundling and interoperability practices.

Similar questions are asked about competition in AI products, including how Microsoft competes for customers against businesses that bundle extra features or services with AI or software like Microsoft 365. Kovacic says this suggests the agency is trying to identify key market players and assess how important tactics like bundling are, with AI potentially being part of an illegal tying arrangement or a critical competitive advantage.

The US is not alone in this scrutiny. The European Commission, UK Competition and Markets Authority (CMA), and Japan Fair Trade Commission have all investigated Microsoft’s cloud services within the last year. Haurek says Microsoft is “committed to working quickly and constructively with the CMA” and is cooperating with investigations in Europe and Japan, where the cloud sector “has never been more dynamic and competitive.”

As a $3 trillion company, Microsoft was “almost inevitable” to become a target of third-party antitrust complaints, Kovacic says. In the US, Microsoft has faced a government challenge over its Activision Blizzard acquisition but ultimately prevailed. It has yet to face a recent breakup threat like Google, Meta, Amazon, and Apple have.

So far, Microsoft has largely been absent from the political calls to break up Big Tech. Its business-focused offerings have helped it avoid child safety and moderation fights that create political enemies. Kovacic credits Microsoft’s adaptation after its earlier monopolization case, saying it is generally regarded as “having the best compliance program” and “the best approach to dealing with the regulators.”

A case against Microsoft could significantly impact the AI industry, where a handful of companies are vying for market share. Even if tech companies prevail, antitrust suits can require years of litigation and put internal business operations under a microscope. While none have resulted in a breakup, Apple and Google are under court orders restricting anticompetitive practices, and Apple and Amazon’s trials have yet to take place.

Kovacic notes that the totality of tech antitrust cases could tip the scales. “The direction of the entire information services sector is going to depend on the resolution of this very large number of pending cases and investigations involving Big Tech,” he says.