US Antitrust Authorities Investigate Whether MS Cloud Engages in 'Anticompetitive Practices'

U.S. competition authorities are reportedly set to launch an investigation into alleged anticompetitive practices by Microsoft (MS) in its cloud business division.

According to major foreign media on the 14th (local time), the U.S. Federal Trade Commission (FTC) is examining allegations that MS abused its market dominance by imposing punitive conditions to prevent customers of its cloud service, 'Azure,' from switching to competing platforms. These punitive conditions include significantly increasing subscription fees or charging high exit fees for customers leaving MS cloud services, as well as making MS 365 productivity software incompatible with competing clouds.

The FTC is reportedly planning to decide whether to conduct a formal investigation after consulting industry insiders and consumers regarding MS's business practices.

Previously, MS faced antitrust complaints from competitors over similar allegations. Google filed a complaint with the European Union (EU) Commission last September, accusing MS of restricting competition in the cloud computing market through unfair license agreements with penalty-like clauses, causing significant harm to European companies and governments.

In November 2022, the 'Cloud Infrastructure Services Providers in Europe (CISPE),' an industry group including members such as Amazon, submitted a complaint to the EU Commission, claiming that MS's cloud contract terms violated competition laws. However, CISPE withdrew the complaint in July after MS individually agreed to pay €22 million (approximately 32.8 billion KRW).

In the cloud market, fierce competition is ongoing among Amazon Web Services (AWS), the cloud division of the world's largest e-commerce company Amazon, MS Azure, and Google Cloud. According to market research firm Synergy Research Group, in the second quarter, Amazon held a 32% share of the global cloud market, MS 23%, and Google 12%.

MS's market share was once more than 20% behind the market leader Amazon, but by partnering with OpenAI, the developer of ChatGPT, and quickly integrating artificial intelligence (AI) into its products ahead of competitors, MS has been increasing its cloud market share. MS formed a partnership with OpenAI, a startup, in 2019 and invested $13 billion by last year. In return, MS obtained exclusive rights to run OpenAI models on its cloud platform Azure.