FTC broadens probe into Microsoft

The Federal Trade Commission has widened its Microsoft investigation from software bundling to a broader review of cloud services, AI products, data-center capacity and the company’s OpenAI ties, according to CIO, which cited new details from reporting by The Verge. The probe now covers Microsoft’s business agreements, licensing arrangements and product interoperability, alongside questions about how the company packages AI, security and software into products such as Windows and Office. (cio.com) The FTC opened the investigation in November 2024 and intensified it in early 2026 by sending civil investigative demands, or CIDs, to more than a half-dozen companies that compete with Microsoft in business software and cloud computing, CIO and Bloomberg Law reported. (news.bloomberglaw.com) Microsoft and the FTC declined to comment, Bloomberg Law said. ### What exactly did the FTC add to the Microsoft probe? CIO reported on June 1 that the FTC is now scrutinizing Microsoft’s data centers, capacity constraints, and AI research and spending in addition to bundling and licensing practices. The article said the agency is also asking about industry AI offerings, particularly the addition of extra features and services to long-standing products such as Microsoft 365. (cio.com) Bloomberg Law reported in February that the agency’s requests to rivals sought information on Microsoft’s cloud software and AI offerings, including Copilot, and asked whether Microsoft makes it harder for customers to use Windows, Office and other products on rival cloud services. (cio.com) The demands also sought information on bundling of AI, security and identity software into products including Windows and Office. ### Why are cloud licensing and interoperability central here? The FTC’s questions focus in part on whether Microsoft structures licensing in ways that make it difficult or costly for customers to switch to competing cloud providers, CIO reported in February. (cio.com) CIO said the agency has been examining whether Microsoft makes it “difficult, more expensive, or near-impossible” to use Windows, Office or other products on competitors’ cloud infrastructure. Microsoft has said some products are not fully interoperable with rival clouds because the underlying technology differs, Bloomberg Law reported. (news.bloomberglaw.com) The company has also made changes to some policies and reached an agreement with a group representing European cloud providers after complaints in multiple markets, Bloomberg Law and CIO reported. ### Where does OpenAI fit into this case? The FTC’s January 2025 staff report on large AI partnerships said Microsoft-OpenAI was one of three major cloud provider-AI developer pairings the agency studied under its 6(b) authority. The report said those partnerships involved more than $20 billion in cumulative investment and raised questions about access to key AI inputs such as computing resources and engineering talent, switching costs for AI developers, and access by cloud providers to sensitive technical and business information. (cio.com) CIO’s June 1 report said the broader Microsoft probe now includes the company’s AI research and spending, a category that overlaps with Microsoft’s multibillion-dollar OpenAI relationship described in prior FTC work. (news.bloomberglaw.com) The agency’s earlier report did not accuse Microsoft of wrongdoing, but it laid out competition questions around cloud-provider partnerships with leading AI developers. ### What do the civil investigative demands tell us? Bloomberg Law reported on Feb. 13 that at least half a dozen companies received the FTC’s demands. The requests asked for information not only on Microsoft’s conduct but also on competitors’ organizational charts, product roadmaps, business and marketing strategies, and plans around bundling, pricing, discounting and profitability, according to CIO’s June 1 account of the newer demands. (ftc.gov) CIDs are subpoena-like tools used in civil investigations and do not guarantee a lawsuit. CIO said they typically, but not always, precede a formal complaint or enforcement action. (cio.com) ### Who is running the case now? Lina Khan, the former FTC chair, launched the Microsoft investigation during the final weeks of the Biden administration, Bloomberg Law reported. Bloomberg Law said the probe has continued during President Donald Trump’s second term and is now in the hands of FTC Chairman Andrew Ferguson. (news.bloomberglaw.com) The next public marker is whether the FTC moves from information gathering to a complaint. Bloomberg Law said no final decisions had been made, and CIO said the agency is still collecting evidence through its demands to rivals and other market participants. (cio.com) (news.bloomberglaw.com)