US FTC Investigates Microsoft for Potential Antitrust Violations in Cloud Services

Although Google is currently the company most often targeted by investigations and sanctions for monopolistic behavior (the US Department of Justice has even declared it an illegal monopoly), Microsoft was once the focus of antitrust scrutiny, especially regarding its dominance in the operating systems market.

However, the landscape has changed with the rise of smartphones and a shift in Microsoft’s business strategy. Now, it appears that the Federal Trade Commission (FTC) has found new evidence suggesting that Microsoft might be engaging in practices that could violate antitrust laws.

FTC Investigates Microsoft’s Bundling Practices

The FTC’s concerns revolve around Microsoft’s strategy of bundling its office suite, Microsoft Office, with cloud subscription plans, which also include security services. Currently, the Microsoft 365 subscription plan (formerly known as Office 365) offers not just the Office suite but also 1TB of OneDrive cloud storage and the advanced version of Microsoft Defender security software.

This bundling approach has raised alarms among companies competing with some of these services, such as Slack and Zoom, who argue that Microsoft’s integration of Teams for free into both Windows and its subscription plans is harming their ability to sell similar services at competitive prices. As a result, these rivals claim that many customers are less inclined to pay for third-party solutions when they can access Microsoft’s offerings for free or at a lower cost as part of a larger subscription.

Impact on Business Clients and Cloud Services

Microsoft’s bundling strategy also extends to its enterprise offerings, particularly Azure Cloud, which combines both productivity and security tools into a single package. For businesses, this makes Microsoft’s services highly attractive, but it also raises concerns about fair competition in the cloud services market.

In response to these concerns, the FTC has begun meeting with rival companies and has decided to launch a formal investigation into Microsoft’s practices. The last time Microsoft faced such scrutiny was in the late 1990s, when it was accused of similar anti-competitive behavior, which ultimately led to a landmark antitrust case.