The US Federal Trade Commission has stepped up an inquiry into Microsoft’s commercial practices, seeking to determine whether the software giant has used its Windows, Office and AI-related products to hinder rivals’ ability to sell cloud computing services. In recent weeks the FTC issued civil investigative demands to at least six companies that compete with Microsoft in enterprise software and cloud services, scrutinising licensing terms, product interoperability and alleged bundling of security, identity and AI features.
The investigation, which began in the final months of the Biden administration and has continued into the current presidency, is overseen by FTC chair Andrew Ferguson. The requests for information resemble formal subpoenas and ask for granular data on Microsoft’s licensing changes introduced in 2019, as well as detailed records on AI model training costs, data access, and the operation of its data centres and compute capacity.
Regulators are probing whether Microsoft’s licence terms make it more difficult, costly or impossible for customers to run Windows, Office and certain other products on rivals’ cloud platforms, and whether Microsoft has tied AI, security or identity services to its own cloud offerings in ways that foreclose competition. About a third of the FTC’s questions focus on Microsoft’s AI strategy and its large investment in OpenAI, exploring whether Microsoft’s integration with the startup reduced competitive activity in areas it once pursued independently.
Microsoft has defended the technical boundaries it imposes, saying differences in functionality and security requirements can limit interoperability across cloud environments. The company also points to a challenging threat environment: repeated cyberattacks have increased customer demand for integrated security features, which Microsoft argues drive some product design and bundling choices.
The probe recalls the landmark 1990s antitrust fight over Microsoft’s bundling of Internet Explorer into Windows, a dispute that reshaped US competition law for platform software. This time the stakes extend into cloud computing and foundational AI, markets where control over software stacks and access to compute and models can confer durable advantage and shape who wins the AI race.
For customers, competitors and investors the outcome matters. If regulators find evidence of anticompetitive conduct, they could press for behavioural remedies or changes to licensing that make it easier to run enterprise products and AI workloads on rival clouds. Conversely, a decision not to pursue enforcement would leave intact current commercial arrangements and Microsoft’s deep integration with OpenAI, with broad implications for cloud competition, pricing and future AI product development.