FTC suspects Microsoft of monopolizing US government contracts

The US Federal Trade Commission (FTC) has launched an investigation into Microsoft, suspecting the company of violating antitrust laws. The focus was on the practice of combining the company’s popular products with services in the field of cybersecurity and cloud computing, which may have allowed Microsoft to oust competitors from the government procurement market.

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According to Ars Technica, FTC lawyers have been meeting with Microsoft competitors in recent weeks and collecting information about the company’s activities. Particular attention in the investigation is how Microsoft expanded its business with the US government through the practice of bundling its products. In particular, in 2021, after a number of cyber attacks, the company offered to upgrade license packages for federal agencies free of charge, providing access to its advanced cybersecurity tools. After the free period ended, government agencies, including all military departments, began paying for these services, and according to former sales executives of the company, this was similar to “hooking” customers on “free samples”, since after installing updates they became dependent on Microsoft ecosystem.

It is noted that such Microsoft tactics could violate laws governing contracts and competition. There were also concerns that even some of the company’s own lawyers were concerned about the antitrust aspects of these deals. Microsoft claims that its proposal was “structured to avoid antitrust concerns” and that its “sole purpose at that time was to support the administration’s urgent request to strengthen the security of federal institutions.”

However, the FTC believes that Microsoft, while increasing the volume of federal contracts, simultaneously left the government vulnerable to hacker attacks. As part of the investigation, the FTC is looking into an incident involving a vulnerability in a Microsoft product that was used by hackers in the SolarWinds attack. At the same time, the company engineer warned about the problem, but management refused to fix it. In addition, the subject of the investigation is the Entra ID product (formerly Azure Active Directory), which is part of Microsoft’s strategy. Experts also draw parallels with the case against Microsoft in the 1990s, when the US Department of Justice accused the company of an illegal monopoly in the operating system market.

Microsoft has confirmed receipt of an official request from the FTC, which obliges the company to provide documents and information. However, Microsoft spokesman David Cuddy said the FTC’s requests were “ambiguous and devoid of logic.” The FTC, for its part, declined to comment on the progress of the investigation, which will be determined by the commission’s new leadership under the administration of President Donald Trump, who previously announced the appointment of a new agency head and commissioners aimed at combating the dominance of big technology companies.