The Federal Trade Commission has spent the past year and a half building a case that could test whether Microsoft’s dominance in enterprise software, cloud infrastructure and artificial intelligence crosses into illegal territory. What began as a quiet inquiry in late 2024 has expanded. Regulators now press the company’s competitors for answers on licensing terms, product bundling and barriers that keep customers locked in.
At least half a dozen rivals in business software and cloud computing received civil investigative demands in recent weeks. The requests seek details on how Microsoft structures its deals, according to people familiar with the matter. Bloomberg first reported the escalation. And the agency shows particular interest in Azure, Copilot and the way security, identity and AI features get packaged together.
Short. Direct. The probe continues without pause from one administration to the next.
Back in November 2024 the FTC sent Microsoft its own detailed demand for information. That document covered cloud computing, artificial intelligence and cybersecurity offerings. Regulators zeroed in on bundling practices. They wanted to know how the company combines Office productivity tools, security software and cloud services. They also examined Microsoft’s growing influence in AI, the New York Times reported at the time.
Two people familiar with the inquiry described the request as long and sweeping. Microsoft declined to comment then. It has since said it cooperates fully and that its practices promote competition while delivering products customers expect.
But the questions keep coming. New demands sent to competitors probe licensing arrangements that critics say make it expensive to run Windows Server or other Microsoft software on rival clouds. Customers have complained for years that 2019 licensing changes favored Azure. Google told the FTC in 2023 that Microsoft used dominance in one area to give its own cloud products an unearned advantage. The search giant pointed to lock-in effects that discourage switching.
Microsoft pushes back. It highlights competition from Amazon Web Services and Google Cloud. Growth numbers for those providers, it argues, prove the market stays open. Yet the FTC wants evidence. It asks rivals about costs of entry, barriers, interoperability challenges and the impact of Microsoft’s policies on their own business plans.
The agency also examines AI. Civil investigative demands ask about bundling AI capabilities with existing enterprise software. They seek road maps, pricing strategies, profitability data and documents that discuss how Microsoft’s position affects competition in AI tools. One set of questions explores whether combining features creates an edge that smaller players cannot match.
And the OpenAI partnership draws close attention. A separate FTC study under Section 6(b) authority looked at ties between cloud providers and AI developers. The resulting report detailed Microsoft’s multibillion-dollar investment in OpenAI. It noted exclusive cloud arrangements. Microsoft built a supercomputer described as one of the largest in the public cloud, dedicated to OpenAI’s training needs. OpenAI committed to substantial spend on Azure. Internal documents showed revenue sharing, board observer rights and shared intellectual property flows.
Satya Nadella once remarked that if OpenAI disappeared tomorrow, Microsoft retained the rights, people, compute and data to continue. The FTC report captured that statement. It highlighted how such partnerships can raise switching costs, limit access to compute resources for others and give partners early looks at sensitive technical and financial data. No finding of illegality appeared in the study. But the facts sit squarely inside the broader antitrust review.
Enterprise buyers feel the pressure. Many renew massive agreements that discount Azure usage when they buy security, identity or AI add-ons. Moving workloads elsewhere triggers higher licensing fees. Third-party support providers say the model squeezes their business. The FTC hears those voices through its demands to competitors.
This marks the most serious U.S. antitrust scrutiny of Microsoft since the 1990s browser wars. That earlier case ended in settlement. It still reshaped the industry, clearing space for Google and others. Today the stakes center on cloud market share that tops 20 percent by some measures and an AI strategy built on exclusive access to vast computing power.
Regulators in Europe, Britain and Japan run parallel inquiries. The European Commission examines cloud practices. The U.K. Competition and Markets Authority launched a strategic market status review of Microsoft’s business software. Japanese officials raided offices. Microsoft says it works constructively with all of them. The company notes the cloud sector has never been more dynamic.
Yet the American probe carries special weight. A successful complaint could force changes to licensing, limit certain bundles or require fairer terms for rivals. Even without a breakup, years of litigation would expose internal strategy documents. Product road maps. Pricing models. Partnership agreements. All of it under oath.
Microsoft’s valuation soared past $3 trillion on the strength of Azure growth and AI optimism. Revenue from commercial cloud continues to climb. Copilot subscriptions add another layer. The company argues customers choose its offerings for quality and integration. Not coercion.
Critics counter that choice narrows when discounts and penalties tilt the scale so heavily toward one provider. They point to government contracts won after free cybersecurity upgrades that later tied agencies more tightly to Azure. ProPublica examined those deals. The pattern repeats across sectors.
William Kovacic, former FTC chair, notes that information gathering like this often marks early stages. The current two-member commission could close the matter quietly. Politics may influence timing. But the facts accumulated under both parties suggest momentum.
So the questions multiply. How much does bundling distort competition? Does exclusive compute access in AI create an unbridgeable moat? Can licensing terms that punish multi-cloud strategies be justified as legitimate business practice?
Answers will not arrive soon. The FTC must still decide whether to file a complaint. Microsoft will defend its record. Rivals will provide more data. Customers may speak up or stay silent for fear of retaliation.
One outcome looks clear. The era when Microsoft largely escaped the antitrust spotlight has ended. Cloud power and AI ambition placed it squarely in regulators’ sights. The next phase could reshape how enterprise technology gets bought, sold and built for years ahead.
The Verge obtained additional details on the scope of the civil investigative demands, confirming the agency’s focus on exclusionary behavior in Azure and AI. Its reporting added depth to the questions about interoperability, bundling and market entry barriers that competitors now must address.
WebProNews is an iEntry Publication