The US Federal Trade Commission (FTC) has opened an antitrust investigation into Microsoft, focusing on its bundling practices for cybersecurity and cloud computing services. This approach may have allowed Microsoft to outmaneuver competitors in securing government contracts.
Investigation Details
According to Ars Technica, FTC attorneys have recently been meeting with Microsoft’s competitors to gather insights into the company’s activities. The inquiry centers on how Microsoft expanded its federal government business, particularly through bundling its products. In 2021, following a series of cyberattacks, Microsoft offered free upgrades to federal agencies’ licenses, granting access to its advanced cybersecurity tools.
Once the free period ended, these agencies, including all military departments, started paying for the services. Former Microsoft sales executives have likened this to “hooking” customers with “free samples,” as the updates made them dependent on Microsoft’s ecosystem.
Legal Concerns and Microsoft’s Defense
Microsoft’s bundling practices may violate competition and contracting laws. Reports suggest that even some internal legal experts at Microsoft raised concerns about potential antitrust issues. Nonetheless, Microsoft maintains that its initiative aimed solely to enhance federal cybersecurity in response to urgent government requests.
The FTC, however, suspects Microsoft’s actions not only increased its federal contract volume but also left agencies vulnerable to cyberattacks. As part of the investigation, the FTC is scrutinizing an incident where a vulnerability in a Microsoft product was exploited during the SolarWinds attack. A company engineer had reportedly warned management about this flaw, but the issue was not resolved.
Additionally, the FTC is examining Microsoft’s Entra ID (formerly Azure Active Directory) product, a key component of the company’s strategy. Comparisons are being drawn to Microsoft’s 1990s antitrust case, when the US Department of Justice accused it of monopolizing the operating systems market.
Current Status
Microsoft has acknowledged receiving a formal FTC request for documents and information, adds NIXsolutions. Company spokesperson David Cuddy criticized the FTC’s inquiries as “ambiguous and lacking logic.” The FTC has declined to comment on the investigation’s progress. Any decisions will be influenced by the new leadership under President Donald Trump’s administration, which has emphasized curbing the dominance of large tech companies.
The situation remains dynamic, and we’ll keep you updated as more developments emerge.