Microsoft Outage Fuels Increased Antitrust Scrutiny of Cloud Giants

An IT failure that caused millions of Microsoft Windows devices to crash, disrupting businesses worldwide, has intensified scrutiny of cloud providers as regulators examine consolidation in the industry. This incident, which paralyzed operations for airlines, banks, and governments, has become a focal point in ongoing investigations into the dominance of major cloud computing companies.

According to Bloomberg, the Federal Trade Commission (FTC) is in the early stages of an inquiry into major cloud providers, including their investments in the rapidly growing artificial intelligence sector. Authorities in Europe and South Africa are also investigating the dominance of companies like Microsoft Corp. in the cloud services market.

Bradley Weber, co-chair of Locke Lord’s antitrust practice, remarked, “A high-profile event, like a shutdown of a major cloud provider, could be used as further ammunition” for regulatory action.

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The incident stemmed from a faulty software update on July 19 from the security vendor CrowdStrike, which disabled approximately 8.5 million computers. Microsoft acknowledged the update’s impact, which halted operations across numerous sectors, including airlines, banks, and various government entities.

FTC Chair Lina Khan, speaking on Bloomberg TV, emphasized the broader implications of such disruptions. “The incident shows how concentration in an industry can make it so a single disruption can have cascading effects and really lead to all sorts of breakdowns,” she said. Khan stressed the need for resilient markets and systems to prevent a single crash from causing widespread disruption. Notably, the FTC itself was among the entities affected by the outage.

The severity of the incident has prompted lawmakers to take action. Rep. Mark Green (R-Tenn.), chairman of the House Homeland Security Committee, has called for hearings to address the outage and the vulnerabilities within IT infrastructure.

Source: Bloomberg