Microsoft, a $3 trillion tech titan, is facing a sweeping antitrust investigation from the U.S. Federal Trade Commission (FTC). The inquiry delves into Microsofts dominant role across several industries, including cloud computing, cybersecurity, artificial intelligence (AI), and software licensing. This investigation underscores growing concerns about the companys influence and its alleged practices to stifle competition.

A New Era of Scrutiny

The FTCs inquiry is part of the Biden administration’s broader effort to regulate the technology sector. This marks another chapter in the government’s battle against Big Tech, following lawsuits against Amazon, Meta, Google, and Apple. Microsofts practices, particularly bundling cloud services with its Office and cybersecurity offerings, and its growing foothold in AI, have raised red flags among regulators and competitors alike.

The investigation coincides with FTC Chair Lina Khan’s aggressive campaign to curb anti-competitive behavior among tech giants. With less than two months remaining in Khans tenure, the FTC is taking a closer look at Microsofts practices, especially given its strategic partnerships and investments in the burgeoning AI market.

Dominance Across Sectors

Microsofts influence spans multiple critical markets. Its Azure cloud computing platform is a cornerstone of its business, powering enterprises and public systems alike. Furthermore, Microsofts integration of OpenAIs ChatGPT into its products has deepened its AI leadership, a move that competitors claim sidelines rival AI developers.

In cybersecurity, Microsofts bundling practicessuch as tying its cloud services to software licensinghave sparked complaints from competitors. Rivals argue that this bundling limits opportunities for independent authentication and security providers, consolidating Microsofts control over enterprise IT ecosystems.

The FTCs probe also comes in the wake of high-profile system failures. A July 2024 incident involving CrowdStrike updates crashing Microsoft Windows systems caused widespread disruptions including airport terminals, defense systems, media houses, banks and prominent IT companies. The incident underscored the companys centrality to global infrastructure. Critics argue that this dependence amplifies concerns about Microsoft’s unchecked power.

The Activision Blizzard Controversy

Microsofts $69 billion acquisition of Activision Blizzard was also met with criticism. Although a federal judge allowed the merger to proceed, the FTC had argued that the acquisition could harm competition, especially in the gaming sector. Critics feared that Microsoft might make popular franchises like Call of Duty and Diablo exclusive to its Xbox platform. Microsoft countered these claims, citing agreements with Nintendo and offers to Sony to maintain cross-platform availability.

This acquisition, the largest in Microsofts and video gaming history, reflects its broader strategy to cement dominance in adjacent markets, a practice that critics argue reduces competition and innovation.

A History of Antitrust Challenges

This is not the first time Microsoft has faced antitrust scrutiny. In the late 1990s, the U.S. government attempted to break up the company over its monopoly on PC operating systems and browsers. Although the breakup was overturned, the current investigation evokes parallels with that era, with regulators again targeting Microsofts expansive market power.

Microsofts alleged anti-competitive behavior poses a broader threat to innovation and consumer choice. Critics argue that its bundling practices, acquisitions, and AI strategy create barriers for smaller companies, diminishing competition in critical sectors.