The FTC is reportedly monitoring Microsoft’s cloud practices for potential anticompetitive behavior

The US Federal Trade Commission is reportedly preparing to launch an investigation into claims that Microsoft Corp. uses anti-competitive practices in its cloud business.

The Financial Times referred to unnamed ‘people with direct knowledge of the matter’ claims that the FTC is investigating allegations that Microsoft is abusing its market power by imposing punitive licensing terms to prevent customers from moving their data from Azure to other platforms.

Among the allegations are that Microsoft significantly increases subscription costs for those leaving the company, imposes high exit fees and makes Office 365 products incompatible with competing clouds. The net result of Microsoft’s alleged actions is that it will be difficult and expensive for existing customers to leave the cloud ecosystem.

It is noted that the FTC has not yet formally requested documents or other information from Microsoft as part of its preliminary investigation, indicating that a potential formal investigation is still in its early stages and there is no guarantee it will continue.

An upcoming change of administration in the US, following the election of Donald J. Trump as the 47th US President, could also change whether an investigation will take place, although Republicans have also expressed concerns about big tech companies and their practices in the US. USA past. Conversely, the new administration may also ease up on big tech companies as part of a pledge to reduce regulations and other barriers to innovation and growth.

The fact that the FTC is investigating Microsoft’s practices with Azure comes after Google LLC wrote to the commission in June 2023 Microsoft is accused of anti-competitive practices.

In the letter, Google alleged that Microsoft is implementing software licensing restrictions that essentially force customers to use its Azure cloud computing services to save money. The allegations include that Microsoft is abusing the dominant position of Windows Server and Office to pressure customers to use Azure and using a “complex web” of licensing restrictions designed to prevent companies from diversifying their enterprise software suppliers.

If this is starting to sound like what the FTC is investigating, it goes further, as Google referenced Microsoft’s policy of charging third-party cloud infrastructure providers, such as Google Cloud and Amazon Web Services Inc., for running software such as Windows Server and Office on their respective platforms. The costs are ultimately passed on to customers, but there are no additional costs associated with running Microsoft’s software in the Azure cloud.

Holger Mueller of Constellation Research Inc. noted last year that there is a long history of software vendors trying to keep their competitors out through licensing terms. “The basic trick is that they either limit the services by not running them on other clouds, or they charge more to do so,” Mueller said.

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