Microsoft (NASDAQ:MSFT) is in hot water. The FTC just opened a sweeping antitrust investigation targeting its cloud computing, software licensing, artificial intelligence (AI), and cybersecurity businesses. Critics, including Google and Salesforce (NYSE:CRM), have accused Microsoft of bundling products like Office 365 and Teams with Azure, making it nearly impossible for customers to leave without facing sky-high costs. The move comes as FTC Chair Lina Khan ramps up pressure on Big Tech, aiming to curb what she sees as monopolistic behavior. Microsoft, which has been pouring billions into expanding its global cloud and AI footprint, now faces questions about how those investments might be hurting innovation and competition.
The complaints against Microsoft are stacking up. Google (NASDAQ:GOOG) has gone as far as filing a formal complaint with the European Commission, accusing the Redmond-based giant of locking customers into its cloud ecosystem with punitive licensing terms. Meanwhile, back in the U.S., the FTC is taking a hard look at whether Microsoft’s AI dominance, fueled by its partnership with OpenAI, gives it an unfair edge. Add to that cybersecurity issueslike a recent massive outage impacting Microsoft systems globallyand the stakes couldn’t be higher. Microsoft has long benefited from its role as a top government contractor, but this investigation could shift its trajectory in the booming cloud and AI markets.
And here’s the wildcard: politics. President-elect Trump is set to take office in January, and while his administration has historically been tough on Big Tech, Microsoft has seen its fair share of wins under his watchremember that $10 billion Pentagon contract? But with Lina Khan on her way out, there’s no guarantee this probe will survive a leadership shakeup. For investors, the big takeaway is this: Microsoft’s future in its most profitable sectors is suddenly looking uncertain. And in a market as cutthroat as tech, uncertainty is never good for business.
This article first appeared on GuruFocus.
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