The probe, approved by FTC Chair Lina Khan ahead of her likely departure in January, comes amid the election of Donald Trump as US president. The expectation that Trump will appoint a fellow Republican with a softer approach toward business leaves the outcome of the investigation uncertain.
The FTC is examining allegations that Microsoft is potentially abusing its market power in productivity software by imposing punitive licensing terms to prevent customers from moving their data from its Azure cloud service to other competitive platforms. The FTC is scrutinising practices related to cybersecurity and artificial intelligence products.
Competitors have slammed Microsoft's practices, claiming they keep customers locked into its cloud offering, Azure.
NetChoice, a lobbying group representing online companies including Amazon and Google, criticised Microsoft's licensing policies and its integration of AI tools into its Office and Outlook.
"Given that Microsoft is the world's largest software company, dominating in productivity and operating systems software, the scale and consequences of its licensing decisions are extraordinary," the group said.
In September, Google complained to the European Commission about Microsoft's practices, alleging it made customers pay a 400 per cent mark-up to keep running Windows Server on rival cloud computing operators and provided them with later and more limited security updates.
The FTC had already claimed jurisdiction over probes into Microsoft and OpenAI regarding competition in artificial intelligence and started looking into Microsoft's $650 million deal with AI startup Inflection AI.
Microsoft has been an exception to US antitrust regulators' recent campaign against allegedly anticompetitive practices at Big Tech companies. Facebook owner Meta Platforms, Apple, and Amazon.com. have all been accused by the US of unlawfully maintaining monopolies. Alphabet's Google is facing two lawsuits, including one where a judge found it unlawfully thwarted competition among online search engines.
Microsoft CEO Satya Nadella testified at Google's trial, saying the search giant was using exclusive deals with publishers to lock up content used to train artificial intelligence.
It remains unclear whether Trump will ease up on Big Tech, whose first administration launched several Big Tech probes.
JD Vance, the incoming vice president, has expressed concern about the power the companies have over public debate.
"The Trump administration was an aggressive enforcer of the antitrust laws filing suits against Google and Facebook.
Vole has benefited from Trump policies in the past. In 2019, the Pentagon awarded it a $10 billion cloud computing contract that Amazon had widely been expected to win. Amazon later alleged that Trump exerted improper pressure on military officials to steer the contract away from its Amazon Web Services unit.
