MS, Nightmare from 25 Years Ago Revisited... US Antitrust Authorities Draw Their Swords

FTC Launches Comprehensive Antitrust Investigation into MS

U.S. competition authorities are conducting a comprehensive antitrust investigation into Microsoft Corporation's (MS) core businesses. The investigation covers everything from cloud computing and software businesses to cybersecurity and artificial intelligence (AI) product sectors. This is the first FTC antitrust investigation into MS since the 1990s, when MS faced antitrust scrutiny for bundling its Internet browser, Internet Explorer, with Windows.

On the 27th (local time), Bloomberg reported that the U.S. Federal Trade Commission (FTC) began an antitrust investigation into MS after conducting informal interviews with MS competitors for over a year. The FTC sent a request letter to MS demanding related information about the investigation. This was signed by Lina Khan, the FTC Chairwoman.

The FTC is concerned about MS bundling its cloud service, Azure, with Office productivity and security software. It is reportedly examining MS’s practice of providing productivity software MS 365 and security software Entra ID together with Azure, making it incompatible with competing cloud services.

The industry views MS as having effectively monopolized the market, hindering fair competition. Companies such as Salesforce and Zoom Communications argue that MS’s practice of bundling its popular software products like Word and Excel with its collaboration tool Teams for free is anti-competitive.

According to Bloomberg, the FTC investigation into MS gained momentum following a series of cybersecurity incidents related to MS products. A notable example is the July incident where a software update flaw in cybersecurity firm CrowdStrike’s software running on MS Windows caused MS Windows devices worldwide to become unresponsive.

Subsequently, MS cloud service outages in the U.S. caused user inconvenience. Given MS’s dominant market position, concerns have been raised that such issues could have ripple effects on the global economy.

This FTC investigation is effectively the first since the 1990s when MS was investigated for antitrust violations for bundling Internet Explorer with the Windows PC operating system, which was deemed to hinder fair competition. That investigation is considered one of the most significant events in IT industry history. Following the FTC investigation, the Department of Justice filed a lawsuit against MS in 1998, and in the first trial, MS was ordered to split into two separate entities. Although MS narrowly avoided the split in the appeals court, it was required to allow compatibility of competing software on Windows, and founder Bill Gates stepped down from the business.

However, the election of Donald Trump as president is expected to be a variable. If Trump appoints an FTC chairperson who is friendly to Big Tech, MS’s fate could change. Elon Musk, CEO of Tesla and nominated head of the Government Efficiency Department (DOGE) in Trump’s second administration, has expressed negative views about Lina Khan, the ‘Big Tech reaper’ FTC chairwoman. Because of this, even Google, which was ruled a monopoly by the court in August and faces the possibility of having to divest its Chrome web browser by the Department of Justice, is seeing some hope that regulatory policies might shift with the start of Trump’s second term administration.