Report: FTC to Investigate Allegedly Anti-Competitive Practices at Microsoft

The Federal Trade Commission (FTC) is reportedly set to investigate allegedly anti-competitive practices at Microsoft’s cloud computing business.

The regulator will focus on allegations that the tech giant illegally uses the market power of its Office 365 productivity software to benefit its Azure cloud service, Reuters reported Thursday (Nov. 14), citing unnamed sources.

The allegations are that Microsoft increases subscription fees for customers who leave, charges steep exit fees and makes its Office 365 products incompatible with competitive cloud providers, according to the report.

The Financial Times, which also reported Thursday on the potential investigation and cited unnamed sources, said the probe has not yet reached the stage where the FTC would formally request information from Microsoft.

The FTC did not immediately reply to PYMNTS’ request for comment.

If launched, the investigation would come after the FTC sought public comment on the business practices of cloud computing providers and found that most of the responses it received raised concerns about competition, the Financial Times reported.

The FTC announced its Request for Information (RFI) on this topic in March 2023, saying that cloud computing is used by companies in a wide range of industries and is increasingly central to many parts of the economy.

“The RFI is aimed at better understanding the impact of this reliance, the broader competitive dynamics in cloud computing and potential security risks in the use of cloud,” FTC Chief Technology Officer Stephanie N. Nguyen said at the time in a press release.

In November 2023, the regulator said in a press release that its RFI raised a number of issues, including competition.

The reports of a potential FTC investigation come at a time when Microsoft is seeing demand for cloud and other services driven in part by the demand for artificial intelligence (AI).

During its Oct. 31 earnings call, Microsoft said it is aggressively expanding its AI infrastructure globally, announcing new cloud and AI investments in Brazil, Italy, Mexico and Sweden, as it works to meet surging demand for AI computing resources.

The company also reported that Microsoft Cloud revenue reached $38.9 billion in its fiscal first quarter, up 22% year over year.