The U.S. Federal Trade Commission (FTC) has recently launched another investigation into Microsoft, alleging that the company’s practice of bundling Office products with its cybersecurity and cloud computing services undermines market competition. The FTC further contends that Microsoft has deliberately leveraged government cybersecurity crises to promote its products.
Reports suggest that FTC-appointed attorneys have been conducting interviews with Microsoft’s competitors. These interviews have revealed that Microsoft’s bundling of commonly used software like Office with its cloud services significantly intensifies the challenges faced by its rivals.
In response, Microsoft acknowledged being under investigation by the FTC, claiming that the agency’s demands for documentation exceed reasonable boundaries, though the company refrained from providing specific details.
The reports also allege that during periods when the U.S. government faced cyberattacks, Microsoft capitalized on the situation by selling additional software licenses and upgrading these to higher-priced versions. This includes transitioning U.S. government departments, such as military services, to more expensive Microsoft solutions.
Ironically, this sales strategy dates back to 2021, when Microsoft itself fell victim to vulnerabilities in the SolarWinds software platform. At that time, the Biden administration called upon major tech companies to strengthen cybersecurity measures. However, Microsoft allegedly concealed the severity of the vulnerabilities to secure lucrative government contracts.
This investigation into the bundling of Office software with cloud services is not unprecedented. As early as 1998, the FTC investigated Microsoft for tying Internet Explorer (IE) with the Windows operating system, a move that allegedly stifled competition from Netscape and other browsers.
Additionally, the FTC has scrutinized other aspects of Microsoft’s business practices, including its investment in OpenAI and its potential impact on market competition. The commission also intervened during Microsoft’s acquisition of Activision Blizzard, asserting that the deal could disrupt market balance. More recently, Microsoft’s announcement of increased subscription fees for Xbox Game Pass has drawn criticism, with the FTC claiming it exploits the market dominance gained through the Activision Blizzard acquisition to derive undue profits.
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