US launches broad antitrust probe against Microsoft

The Biden administration’s crusade against the new monopolies exercised by the big tech companies extends until the end of its term. Through the Department of Justice and the Federal Trade Commission (FTC), the Democratic administration has sued Google, Meta, Apple and Amazon for abusing their dominant position in different markets. And now it has put the fifth of the tech giants, Microsoft, in its sights. The FTC has launched a broad antitrust probe into several of its businesses, including software licensing and cloud computing, Reuters reported on Wednesday.

The agency headed by Lina Khan, 35, who is expected to step down when Donald Trump takes office, has sent a broad request for information to Microsoft about its cloud computing products, its programs for businesses, its use of artificial intelligence and its cybersecurity services.

The competition regulator is interested in how Microsoft bundles its cloud computing offerings with its other products, a practice that has been denounced by competitors such as Google Cloud, which believes that in this way Microsoft is protecting itself from competitors. Following a recent spat between Microsoft and Google, the search engine company voiced its complaints about the behavior of the giant led by Satya Nadella: “We and many others believe that Microsoft’s anticompetitive practices lock-in customers and create negative downstream effects that impact cybersecurity, innovation, and choice,” Google spokesperson Laura Wheeler told The Verge.

In September, Google publicly announced that it had filed a formal complaint with the European Commission about Microsoft’s practices in licensing cloud software. The cloud computing and data center market is one of the most buoyant sectors in the big tech industry these days. The leaders are Amazon through AWS, and Microsoft with Azure. Google Cloud is the third in a sector that has been driven by the huge demand for computing required for the development and application of artificial intelligence.

Competitors have complained that Microsoft’s licensing terms and bundling of software with cloud services make it harder for rival authentication and cybersecurity companies to compete. Companies including Salesforce’s Slack and Zoom have said Microsoft’s practice of giving away its Teams video conferencing software in a package with popular software products like Word and Excel is anti-competitive and makes it harder for them to compete.

The FTC is also looking at the company’s AI power, which has largely come from its partnership with OpenAI. After more than a year of informal interviews with competitors and business partners, antitrust authorities have compiled a detailed, hundreds-page request that they sent to the company after Khan gave the go-ahead, according to Bloomberg. The FTC’s scrutiny of Microsoft’s cloud computing business has gained momentum following a series of cybersecurity incidents affecting the company’s products, according to the agency.

The CrowdStrike outage, which affected millions of devices running Microsoft Windows systems last July, highlighted the widespread use of the company’s products and how problems with these can impact the global economy. Microsoft is also a top government contractor, supplying billions of dollars in software and cloud services to U.S. agencies including the Defense Department.

The investigation into Microsoft, whose future may depend on the change in the White House, is the latest chapter in a much broader offensive in which the two battering rams of the Biden administration have been the Department of Justice, headed by Attorney General Merrick Garland, and the FTC, led by Lina Khan, the scourge of Big Tech.

The Justice Department has filed two high-stakes lawsuits against Google. The first, launched under President Donald Trump and brought to trial under President Biden, found that the company abused its monopoly power in the search engine market. Prosecutors earlier this month sought sweeping measures to break up that monopoly. The second was set for sentencing on Monday and accuses the company of operating an illegal triple monopoly in the digital advertising market.

It was also the Justice Department that sued Apple, accusing the company of protecting its iPhone monopoly by walling off its ecosystem from super-apps (like WeChat, a gateway to a variety of messaging, e-commerce, and payment services, among others) and cloud-based streaming apps, especially for video games (which reduce the need for phones as powerful as iPhones). It also alleged that Apple prevents the iPhone and Apple Watch from being compatible with competing devices, causes messaging services to communicate poorly with Android phones, and hinders alternative digital wallets. Apple filed a motion to dismiss the case, which was heard in a New Jersey court last week.

Khan’s FTC sued Meta in 2021, accusing it of reducing competition by purchasing Instagram and WhatsApp. Meta founder and CEO Mark Zuckerberg dined with president-elect Trump at his Mar-a-Lago mansion on Wednesday, The New York Times reported. “It’s an important time for the future of American innovation. Mark was grateful for the invitation to join President Trump for dinner and the opportunity to meet with members of his team about the incoming administration,” the company said in a statement distributed to American media.

The FTC also sued Amazon last year, accusing it of engaging in monopolistic practices aimed at inflating prices, degrading quality, and robbing consumers and businesses of innovation. Its founder and largest shareholder, Jeff Bezos, has also sought to reach out to Trump.

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