The federal agency has commenced sending Civil Investigative Demands (CIDs) to Microsoft’s rivals operating in the business software and cloud computing sectors.
It appears the US Federal Trade Commission (FTC) is intensifying its scrutiny of Microsoft, particularly regarding the technology giant’s potentially questionable bundling and licensing strategies.
A Bloomberg report indicates that the federal body has been dispatching civil investigative demands (CIDs) to enterprises contending with Microsoft within the realms of business software and cloud computing.
CIDs are potent, subpoena-like directives employed by government agencies to probe possible civil law infringements, usually preceding the filing of a formal complaint or legal action.
Insider information suggests that at least six companies have been issued these requests, which probe various aspects of Microsoft’s licensing and operational methods, as per the report. The FTC is also gathering data concerning Microsoft’s integration of AI, security, and identity software with its other offerings, such as Windows and Office.
This marks the most recent turn in an ongoing investigation, spanning almost eighteen months, into whether the corporation is unlawfully monopolizing crucial markets for contemporary businesses. Furthermore, it suggests the federal government is attempting to uncover proof that Microsoft impedes, raises costs for, or effectively prevents companies from deploying Windows, Office, or other Microsoft products on rival cloud platforms.
“To assert that MSFT is a habitual transgressor in pushing the boundaries of antitrust legislation would be a significant understatement,” stated Scott Bickley, an advisory fellow at Info-Tech Research Group. “Microsoft operates on the principle of ‘seek forgiveness rather than permission’ and exploits its massive size to compel bundled offerings onto its clientele.”
Licensing and bundling strategies might sideline competitors
The FTC initiated its extensive inquiry into Microsoft in November 2024, issuing a CID that mandated the company to provide approximately ten years’ worth of operational data (spanning 2016 to 2025).
The agency is meticulously scrutinizing the tech behemoth’s long-standing tradition of packaging its Office productivity and security software with its cloud services. This practice could potentially contravene antitrust regulations if the firm is leveraging its commanding position in the productivity sector to secure undue benefits in the cloud computing and cybersecurity arenas.
Specifically, the FTC is investigating Microsoft’s licensing arrangements, which appear to hinder customers from migrating to competing products. Such actions would be deemed unfair and place rivals at a disadvantage.
Microsoft has disputed these allegations and, after numerous complaints in international markets, implemented certain modifications aimed at relaxing its policies. For example, recent rulings in the EU necessitated the separation of Teams from the Office suite. Yet, “this paradoxically led to elevated net pricing for EU customers,” observed Bickley from Info-Tech.
Moreover, the CISPE consortium, representing European cloud providers, finalized an accord with Microsoft in mid-2025; the prominent cloud entity consented to compensate smaller cloud providers, who were previously barred from offering Microsoft services via a hosted model, with €20 million (equivalent to $23.7 million currently). It also pledged to revise its software licensing agreements, enabling European providers to operate Microsoft software on their proprietary platforms at equivalent costs to Microsoft’s.
Nevertheless, Bickley highlighted that fresh grievances contend the company has failed to fulfill this commitment.
It should be noted that these “tepid measures” implemented in the EU are irrelevant for Microsoft clients based in the US, he remarked. Claims concerning product tying, particularly involving Microsoft 365, persist frequently in the United States.
For example, Microsoft’s Listed Providers initiative prevents the deployment of Microsoft’s on-premises software on specific dedicated hosted cloud services, such as those offered by competitors like Amazon, Google, and Alibaba, unless accompanied by mobility rights and Software Assurance (SA), its supplementary volume licensing support. Bickley noted that Microsoft “deliberately” omits certain products from its License Mobility program, which generally facilitates customers transferring workloads to alternative cloud environments.
Among these excluded products and applications are Windows Server, Visual Studio, Windows desktop OS, Microsoft Office, and Microsoft 365. Historically, these items could be deployed within a dedicated cloud setting, but Microsoft revised its regulations in October 2019, limiting this capability exclusively to licenses acquired with SA and mobility rights. Bickley observed that this stipulation affects only Listed Providers, exempting conventional outsourcing services.
Regarding other dubious business practices, Microsoft positions its top-tier Microsoft 365 E5 subscription as the “sole practical short-term financial option” when compared to more affordable alternatives like Microsoft 365 E3, even if this acquisition leads to a “substantial volume of shelfware,” according to Bickley.
“The licensing for several security products is unclear, and during audits, Microsoft often compels clients to upgrade their full suite to E5 to ensure compliance,” he remarked.
Future worries are expected to revolve around the potential bundling or incorporation of AI services like Microsoft Copilot, “for which usage metrics will be vague and [the services will prove] challenging, if not unfeasible, for IT administrators to deactivate,” Bickley stated.
OpenAI Partnership
While the primary and subsequent inquiries have largely concentrated on licensing and bundling, the FTC is additionally examining the company’s collaboration with OpenAI, probing Microsoft’s data centers, capacity limitations, and expenditures in AI research and development.
Significantly, the technology behemoth’s initial $1 billion investment in OpenAI has evolved into a multi-billion-dollar alliance, as Microsoft introduced ChatGPT-driven functionalities across its product portfolio in 2023. The FTC is investigating whether this connection constitutes an unrevealed merger that ought to have undergone antitrust scrutiny.
Moreover, the federal agency is investigating Microsoft’s purported choice to curtail its internal AI research subsequent to the OpenAI investment, which could potentially diminish market competition.
Strategies ‘strikingly consistent’
Ultimately, these events bring to mind the pivotal 1990s US federal inquiry into Microsoft’s monopolistic control over desktop software and web browsers. A federal judge concluded back then that the company intentionally integrated the Internet Explorer (IE) browser into Windows to gain an advantage over competitors such as the now-defunct Netscape.
And, as analysts observe, this suggests Microsoft has not assimilated lessons from its historical experiences.
“Although technology and market dynamics have progressed since Microsoft’s initial antitrust lawsuit in 1998, which compelled them to separate IE from the Windows OS, their strategic approaches have remained strikingly consistent,” Bickley commented.
This article originally appeared on CIO.com.
