The U.S. Federal Trade Commission (FTC) is set to initiate an antitrust investigation into Microsoft (MSFT, Financial) regarding its cloud computing business. Insider sources have revealed that Microsoft is potentially enforcing punitive licensing terms to prevent customers from moving their data from its Azure cloud service to competing platforms.
Currently, Microsoft's stock showed a slight increase of 0.15%, trading at $425.82 per share. Both the FTC and Microsoft declined to comment on the ongoing situation.
The investigation will reportedly focus on Microsoft's increased subscription fees for departing users, exorbitant exit fees, and the incompatibility of its Office 365 products with rival cloud systems. The FTC's decision to launch this formal investigation follows feedback gathered from industry participants and the public concerning cloud service providers' business practices.
The findings from last November indicated that many responses highlighted market competition concerns, including restrictions on using certain software on other cloud services. Furthermore, the FTC noted that Microsoft charges fees for data transfer from certain cloud systems and offers minimum consumption contracts that provide discounts to businesses in exchange for guaranteed spending levels.
Besides the FTC, other regulatory bodies have expressed concerns over similar issues with Microsoft. The UK's Competition and Markets Authority (CMA) is investigating both Microsoft and Amazon (AMZN). Earlier findings by the UK Office of Communications (Ofcom) indicated customer complaints about being locked into services with hefty exit fees and exclusive discounts.
As more businesses outsource storage and computing to the cloud, cloud infrastructure has become one of the most lucrative segments for large tech firms. The increasing demand for computational power to train and run artificial intelligence (AI) models has further accelerated this trend. Cloud service spending surged to $561 billion last year, with projections by Gartner suggesting it will reach $675 billion this year and $825 billion by 2025.
Microsoft holds approximately 20% of the global cloud market share, trailing Amazon Web Services (AWS) at 31% but nearly doubling Google's (GOOGL) 12% share. Intense competition exists among these top companies and smaller providers. Recently, Microsoft accused Google of conducting "shadow campaigns" by secretly funding adversarial lobbying groups to undermine Microsoft's regulatory standing.
