The Federal Trade Commission is broadening its investigation into Microsoft Corp., turning a sharper lens on the technology giant’s practices in artificial intelligence and cloud computing — two sectors where the Redmond, Wash., company has rapidly consolidated power through massive investments and strategic partnerships. The probe, which includes outreach to Microsoft’s rivals for information, signals that the Biden-era antitrust momentum has not only survived the change in administration but is intensifying in ways that could reshape how Big Tech operates in the AI era.

According to Reuters, the FTC has ramped up its scrutiny of Microsoft by sending detailed questionnaires to competitors and industry participants, seeking information about the company’s conduct in both cloud infrastructure and artificial intelligence markets. The inquiries are understood to cover a range of practices, from licensing terms and data portability restrictions to the way Microsoft bundles its AI tools with its dominant Azure cloud platform and Office productivity suite.

A Probe With Deep Roots and New Branches

The FTC’s interest in Microsoft is not entirely new. The commission has been examining the company’s cloud computing practices for several years, particularly after complaints from rivals that Microsoft’s licensing agreements effectively penalize customers who choose competing cloud providers such as Amazon Web Services or Google Cloud. But the current phase of the investigation represents a significant escalation, both in scope and in the specificity of the questions being posed to third parties.

What has changed, industry observers say, is the explosive growth of generative AI and Microsoft’s central role in it. The company’s multibillion-dollar investment in OpenAI — the maker of ChatGPT — has given it privileged access to some of the most advanced AI models in the world. Microsoft has integrated these models across its product ecosystem, from the Copilot AI assistant embedded in Windows and Office 365 to enterprise AI services offered through Azure. This deep integration is precisely what has drawn the FTC’s attention, as regulators seek to determine whether Microsoft is leveraging its existing market power to foreclose competition in the nascent AI market.

Rivals Speak Up — Quietly

The questionnaires sent by the FTC to Microsoft’s competitors are reportedly extensive, covering topics such as whether Microsoft’s licensing terms make it economically impractical for enterprise customers to run Microsoft software on non-Azure cloud platforms, and whether the company’s bundling of AI capabilities with its productivity and cloud offerings creates unfair competitive advantages. Reuters reported that the FTC has reached out to multiple companies, though most are reluctant to speak publicly for fear of retaliation or damaging business relationships with Microsoft.

This dynamic — where competitors are eager to share grievances with regulators but unwilling to do so on the record — is a familiar pattern in antitrust investigations involving dominant technology firms. It underscores the degree to which Microsoft’s reach extends across the enterprise software stack, making it a partner, competitor, and gatekeeper all at once. Companies that depend on Microsoft for operating systems, productivity tools, or cloud infrastructure may be reluctant to antagonize a firm that holds so much sway over their daily operations.

The Cloud Licensing Controversy

At the heart of the cloud-related concerns is a practice that rivals have long criticized: Microsoft’s approach to software licensing for customers who want to run Windows Server, SQL Server, and other Microsoft products on competing cloud platforms. Critics allege that Microsoft imposes higher fees or more restrictive terms on customers who choose AWS, Google Cloud, or other providers, effectively creating a financial incentive to stay within the Azure ecosystem. This practice, sometimes referred to as a “cloud tax,” has been the subject of regulatory scrutiny in Europe as well, where the European Commission has examined similar complaints.

Microsoft has previously defended its licensing practices, arguing that they reflect legitimate business decisions and that customers have ample choice in the market. The company has also pointed to adjustments it has made to its licensing terms in response to feedback, including changes announced in recent years that were designed to address some of the concerns raised by European regulators and cloud competitors. However, critics contend that these changes have been insufficient and that the fundamental structure of Microsoft’s licensing regime continues to tilt the playing field in Azure’s favor.

AI Integration as the New Battleground

The AI dimension of the FTC’s investigation adds a layer of complexity that goes beyond traditional antitrust analysis. Microsoft’s partnership with OpenAI is unlike any previous technology alliance in its scope and strategic significance. Microsoft has invested more than $13 billion in OpenAI, securing exclusive rights to commercialize OpenAI’s models through Azure and integrating them into products used by hundreds of millions of people and businesses worldwide. This arrangement has made Microsoft the de facto distribution channel for some of the most powerful AI technology available, raising questions about whether competitors — including other AI developers and cloud providers — can compete on a level playing field.

The FTC’s inquiry appears to be exploring whether Microsoft’s integration of OpenAI’s models into its products constitutes a form of tying or bundling that could harm competition. For example, if enterprise customers who subscribe to Microsoft 365 receive AI capabilities powered by OpenAI at no additional cost or at a significant discount compared to standalone AI offerings from competitors, this could make it extremely difficult for rival AI companies to gain traction in the enterprise market. Similarly, if Azure customers receive preferential access to OpenAI’s latest models, this could reinforce Azure’s competitive position in cloud computing at the expense of AWS, Google Cloud, and smaller providers.

Political Crosswinds and Regulatory Uncertainty

The investigation unfolds against a backdrop of political complexity. The FTC under Chair Lina Khan pursued an aggressive antitrust agenda that targeted Big Tech broadly, and while the current commission’s posture has evolved, the Microsoft probe suggests that scrutiny of dominant technology platforms remains a bipartisan concern. Cloud computing and AI are increasingly viewed as critical infrastructure for the American economy, and policymakers across the political spectrum have expressed interest in ensuring that these markets remain competitive and open to innovation.

Microsoft, for its part, has sought to position itself as a responsible steward of AI technology, emphasizing its investments in AI safety, its support for open-source AI initiatives, and its willingness to engage constructively with regulators. The company has also highlighted the competitive nature of the cloud and AI markets, pointing to the strong positions held by Amazon, Google, and a growing roster of AI startups as evidence that no single company dominates these sectors.

What Comes Next for Microsoft and the Industry

The trajectory of the FTC’s investigation remains uncertain. Antitrust probes of this nature can take years to develop, and there is no guarantee that the inquiry will result in formal enforcement action. However, the mere existence of the investigation — and the breadth of the questions being asked — is likely to have a chilling effect on some of Microsoft’s more aggressive commercial practices. Companies under active FTC scrutiny often moderate their behavior in anticipation of potential enforcement, and Microsoft’s rivals may feel emboldened to push back more forcefully on licensing terms and bundling practices.

For the broader technology industry, the probe represents a critical test of whether existing antitrust frameworks are adequate to address the competitive dynamics of the AI era. The integration of AI into cloud platforms, productivity software, and enterprise services is blurring the boundaries between markets in ways that traditional antitrust analysis may struggle to capture. If the FTC ultimately concludes that Microsoft’s practices are anticompetitive, the remedies it pursues could set precedents that shape the behavior of every major technology company for years to come.

As Reuters first reported, the scope and intensity of the FTC’s current inquiry suggest that regulators are determined to understand — and, if necessary, intervene in — the complex web of relationships, investments, and commercial practices that define Microsoft’s position at the intersection of cloud computing and artificial intelligence. The outcome will be closely watched not only by Microsoft’s competitors and customers, but by every company with a stake in the future of AI-powered enterprise technology.