FTC Probe Targets Microsoft Azure Cloud Practices

The Federal Trade Commission is investigating Microsoft for potential unfair methods of competition in its cloud, software products, and related services. New details obtained by The Verge show the agency sent civil investigative demands to at least half a dozen of Microsoft's competitors, with a focus on Azure and AI.

The FTC is examining potentially exclusionary behavior in cloud and AI. Over the past several years, Microsoft has largely managed to withstand populist calls to break up Big Tech while peers faced sweeping lawsuits. The probe suggests that grace period could be nearing an end.

The investigation began under the Biden administration in 2024 and continued under President Donald Trump. Bloomberg previously outlined the contents of the CIDs, which are similar to subpoenas.

Investigators requested details on agreements and interoperability. The Verge obtained previously unreported information about the letters from an industry source who reviewed them. The questions cover industry practices, competitive stumbling blocks, Microsoft's business agreements, licensing arrangements, and interoperability of its products.

The documents generally span more than 15 pages and over 15 questions, often with extensive sub-parts. The CIDs state the goal is to determine if Microsoft has used unfair methods of competition in violation of the FTC Act.

Customer complaints target 2019 licensing changes. Customers have complained, often anonymously for fear of retaliation, that Microsoft's 2019 changes to its licensing terms made it significantly more costly to run Windows software on infrastructure outside of Azure. In 2023, Google accused Microsoft of using dominance in other areas to give its own cloud products an unearned advantage and lock in consumers.

Microsoft says it is cooperating and sees strong competition. Microsoft spokesperson Alex Haurek says that the company is cooperating fully with the FTC and believes its practices promote competition while delivering innovative products customers expect. Microsoft insists there is plenty of competition in the cloud sector and pointed to Google growing 63% year over year and competing head-to-head with other major providers including AWS.

Microsoft's growth in cloud computing has helped push its valuation to historic highs.

A lawsuit is not guaranteed but remains possible. There is no guarantee the investigation will end in a legal complaint. After further investigative steps, FTC staff will choose whether to recommend filing one, and the agency's two commissioners will take a vote.

Should they approve a lawsuit, Microsoft may find itself back in a hot seat it occupied more than two decades ago, when a court found it had an illegal PC operating system monopoly.