Microsoft is facing a major antitrust investigation from the US FTC

After more than a year of informal talks with competitors and businesses, defense advocates have made a detailed request to force Microsoft to provide more information, according to people familiar with the matter. The demand, which runs into hundreds of pages, was sent to the company after FTC Chairman Lina Khan signed it, one of the people said.

FTC antitrust lawyers are expected to meet with Microsoft rivals next week to seize information about the Redmond, Washington-based company, according to two people familiar with the plans who, like the others, asked not to be named to discuss privacy concerns.

Microsoft and the FTC declined to comment.

The FTC’s investigation into Microsoft’s cloud computing business took a turn for the worse after a series of cyber security incidents involving the company’s products. The company is a top government contractor, providing billions of dollars in software and cloud services to US agencies including the Department of Defense.

Microsoft’s announcement is one of several shots fired by Khan as he steps down after supporting one of the biggest corporate power struggles the organization has offered over the years. While business leaders hope that President-elect Donald Trump will bring time to ease regulations, it will fall to his new FTC chair — who has yet to be named — to decide how to handle the case.

The FTC investigation renews Microsoft’s review of its businesses over 25 years after the government sued the company over similar charges involving the Windows operating system and its web browser and tried to settle it.

The focus of the latest investigation is Microsoft’s integration of its popular office and security software with its cloud offerings, according to people familiar with the matter.

Microsoft’s cybersecurity failures, combined with its heft as a government contractor, are seen by the FTC as an example of the company’s power over problems in the marketplace, the people said.

In a November 2023 report, the FTC expressed concern that the growth of the cloud market means that “discontinuance, or other problems that undermine the services of cloud providers, could adversely affect the economy or other sectors.”

The CrowdStrike debacle that affected millions of devices running Microsoft Windows earlier this year was a testament to the company’s reach and its impact on the global economy.

Part of the investigation focuses on the company’s practices related to security software called Microsoft Entra ID – formerly known as Azure Active Directory – which helps authenticate users who log into cloud software, some of the people said.

Competitors have complained that Microsoft’s licensing and integration of software and cloud services make it difficult for rival assurance and cybersecurity companies to compete.

Companies like Salesforce Slack and Inc Magnifies Communications Inc. has argued that Microsoft’s practice of offering its Teams video hosting software for free in a bundle with popular applications such as Word and Excel is anti-competitive and makes it difficult for it to compete.

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