FTC digs deeper into Microsoft’s bundling and licensing practices
The US Federal Trade Commission (FTC) seems to be doubling down on its investigation of Microsoft and the tech giant’s potentially shady bundling and licensing practices.According to a Bloomberg report, the federal agency has been issuing civil investigative demands (CIDs) to companies that compete with Microsoft in the business software and cloud computing markets.CIDs are powerful, subpoena-like mandates used by government agencies to investigate potential violations of civil law, typically before a formal complaint or lawsuit is filed.According to inside sources, at least a half-dozen companies have received these requests, which ask a range of questions around Microsoft’s licensing and other business practices, the report said. The FTC is also seeking information on Microsoft’s bundling of AI, security, and identity software into other products, including Windows and Office.This development is the latest in an ongoing, nearly year-and-a-half-long probe into whether the company is illegally monopolizing several markets critical to modern enterprises. It also seems to indicate that the federal government is seeking evidence that Microsoft makes it difficult, more expensive, or near-impossible for companies to use Windows, Office, or other of its products on competitors’ cloud services.“To say MSFT is a serial offender with regard to stretching the limits of anti-trust law would be the understatement of the century,” said Scott Bickley, advisory fellow at Info-Tech Research Group. “Microsoft embodies the mantra of ‘beg forgiveness vs asking permission’ and leverages its scale to force bundled products upon its customer base.”Licensing and bundling tactics could crowd out competitorsThe FTC launched its wide-ranging investigation into Microsoft in November 2024, issuing a CID compelling the company to turn over roughly a decade’s worth of data about its operations (from 2016 to 2025).The agency is closely examining the tech giant’s age-old practice of bundling its Office productivity and security software in with its cloud services. This could potentially violate antitrust laws if the company is exploiting its dominance in the productivity space to gain unfair advantages in cloud computing and cybersecurity markets.Notably, the FTC is looking into how Microsoft structures licensing in a way that impedes customers from switching to rival offerings. This would constitute unfair practice and put competitors at a disadvantage.Microsoft has fought back against the claims, and, following complaints across global markets, made some changes intended to loosen its policies. For instance, recent decisions in the EU forced the unbundling of Teams from the Office suite. However, this “ironically resulted in net higher pricing for EU consumers,” said Info-Tech’s Bickley.Additionally, the CISPE consortium of European cloud providers reached an agreement with Microsoft in mid-2025; the cloud giant agreed to pay €20 million ($23.7 million today) to smaller cloud providers excluded from offering Microsoft services under a hosted model, and to update its software licensing terms to allow European providers to run Microsoft software on their own platforms at prices equal to Microsoft’s.However, Bickley pointed out, recent complaints allege that the company has not delivered on this promise.It’s important to note that these “half-hearted measures” in the EU do not apply to US-based Microsoft customers, he pointed out. Allegations around product tying, notably with Microsoft 365, continue to arise regularly in the US.For instance, Microsoft’s Listed Providers program does not allow Microsoft on-premises software to be deployed on certain dedicated hosted cloud services, including rivals Amazon, Google, and Alibaba, without mobility rights and Software Assurance (SA), its volume licensing support add-on. Bickley pointed out that Microsoft “strategically” excludes products from its License Mobility program which allows customers to move workloads to other clouds.Some of these excluded products and applications include Windows Server, Visual Studio, Windows desktop OS, Microsoft Office, and Microsoft 365. Previously, such products could be deployed in a dedicated cloud environment, but Microsoft changed the rules in October 2019, restricting this option to licenses purchased with SA and mobility rights. Bickley pointed out that this only applies to Listed Providers and excludes traditional outsourcing services.In other questionable commercial practices, Microsoft also makes the purchase of its Microsoft 365 E5 top-tier subscription plan the “only viable short-term economic choice” compared to cheaper options like Microsoft 365 E3, even where the purchase results in a “material amount of shelfware,” said Bickley. “Licensing of several security products is obscure, and upon audit, Microsoft frequently forces customers to upgrade their entire suite to E5 in order to attain compliance,” he noted.Future concerns will likely center around potential bundling or integration of AI services such as Microsoft Copilot, “for which the consumption metrics will be ambiguous and [the services will be] difficult, if not impossible, to disable for IT administrators,” said Bickley.Relationship with OpenAIWhile much of the initial query, and subsequent ones, have focused on licensing and bundling, the FTC is also looking into the company’s relationship with OpenAI, and raising questions about Microsoft’s data centers, capacity constraints, and AI spending and research.Notably, the tech giant’s initial $1 billion investment in OpenAI has grown into a multi-billion-dollar partnership, with Microsoft rolling out ChatGPT-powered features across its product line in 2023. The FTC is examining whether the relationship is an undisclosed merger that should have been subject to antitrust review.Further, the federal agency is scrutinizing Microsoft’s alleged decision to scale back its own AI research following the OpenAI investment, potentially reducing competition.Tactics ‘remarkably the same’Ultimately, all of this recalls the industry-shaping 1990s US federal investigation into Microsoft’s monopoly of desktop software and web browsers. A federal judge ruled at the time that the company deliberately built the Internet Explorer (IE) browser into Windows to edge out rivals like the now-defunct Netscape.And, analysts note, it’s an indication that Microsoft hasn’t learned from those past lessons.“While technology and trends may have evolved since Microsoft’s first anti-trust case in 1998, where they were forced to unbundle IE from Windows OS, their tactics have stayed remarkably the same,” Bickley noted.
2026-02-14 00:18:59