Will Microsoft Be Laid Low By The Feds’ Antitrust Probe?

It mightiness beryllium astatine nan apical of nan tech world now, but nan likelihood of US Department of Justice ineligible action could quickly make things unpleasant for Microsoft.

Microsoft is connected apical of nan world correct now, riding its AI power to go nan world’s second-most valuable company, worth location successful nan vicinity of $3 trillion, depending connected nan day’s banal price.

But that could easy alteration — and not because competitors person recovered a measurement to topple it arsenic king of AI. 

A national antitrust investigation threatens to do to nan institution what was done to it 35 years agone by a US Justice Department suit that tumbled nan institution from its perch arsenic nan world’s apical tech company. It besides led to a mislaid decade successful which Microsoft lagged successful nan technologies that would toggle shape nan world — nan net and nan emergence of mobile.

More specifications astir nan investigation

Although nan investigation is simply a wide one, nan astir consequential parts attraction connected nan cloud, AI, and nan company’s productivity suite, Microsoft 365. It will astir apt excavation heavy into nan measurement Microsoft uses its licensing practices to push aliases unit businesses to usage aggregate Microsoft products.

Here’s really The New York Times describes it: “Of peculiar liking to nan FTC is nan measurement Microsoft bundles its unreality computing offerings pinch agency and information products.” 

The newspaper claims nan investigation is looking astatine really Microsoft locks customers into utilizing its unreality services “by changing nan position nether which customers could usage products for illustration Office. If nan customers wanted to usage different unreality supplier alternatively of Microsoft, they had to bargain further package licenses and efficaciously salary a penalty.”

That’s agelong been a title astir nan measurement nan institution does business. European Union regulators past summertime charged that Microsoft collapsed antitrust laws by nan measurement it bundles Teams into its Microsoft 365 productivity suite. Teams’ rivals for illustration Zoom and Slack don’t person nan expertise to beryllium bundled for illustration that, nan EU says, giving Microsoft an unfair advantage. Microsoft began offering immoderate versions of nan suite without Teams, but an EU connection astir nan suit says nan EU “preliminarily finds that these changes are insufficient to reside its concerns and that much changes to Microsoft’s behaviour are basal to reconstruct competition.”

AI is simply a target, too

Microsoft’s AI business is besides successful nan ineligible crosshairs, though very fewer specifications person travel retired astir it. However, astatine slightest portion of nan probe will apt halfway connected whether Microsoft’s adjacent narration pinch OpenAI violates antitrust laws by giving nan institution an unfair marketplace dominance.

The investigation could besides attraction connected whether Microsoft uses its licensing practices for Microsoft 365 and Copilot, its generative AI chatbot, successful ways that break antitrust laws. In a caller column, I wrote that Microsoft now forces customers of nan user type of Microsoft 365 to salary an further interest for Copilot — moreover if they don’t want it. In January, Microsoft bundled Copilot into nan user type of Microsoft 365 and raised prices connected nan suite by $3 per period aliases $30 for nan year. Consumers are fixed nary prime — if they want Microsoft 365, they’ll person to salary for Copilot, whether they usage it aliases not.

Microsoft besides killed 2 useful features successful each versions of Microsoft 365, for consumers arsenic good arsenic businesses, and did it successful a measurement to unit businesses to subscribe to Copilot. The features allowed users to do highly targeted searches from wrong nan suite. Microsoft said group could alternatively usage Copilot to do that benignant of searching.  (In fact, Copilot can’t lucifer nan features Microsoft killed.) But business and acquisition Microsoft 365 users don’t get Copilot bundled in, truthful they’ll person to salary an further $30 per personification per period if they want nan hunt features, astir doubling nan costs of nan Office suite.

Expect nan feds to record suit

It’s almost definite nan feds will record astatine slightest 1 suit against Microsoft by nan FTC, nan Justice Department, aliases possibly both. After all, national lawsuits against Amazon, Apple, Google, and Meta launched by nan Biden management person been continued nether Trump. There’s nary logic to expect he won’t target Microsoft arsenic well.

There’s different logic nan feds could deed Microsoft hard. Elon Musk is suing OpenAI and Microsoft, claiming their narration violates antitrust laws. He’s besides spending billions to compete against them. Given that he’s fundamentally Trump’s co-president — arsenic good arsenic being Trump’s astir important tech advisor — it’s beautiful overmuch a slam dunk that 1 much national suit will beryllium filed.

As 1 portion of grounds that suits are coming, the FTC weighed successful connected Musk’s broadside successful his suit against nan institution and OpenAI, saying antitrust laws support his claims. In a wink-wink, nudge-nudge declare that nary 1 believes, nan agency says it’s not taking sides successful nan Musk lawsuit.

The upshot

Expect nan investigations into Microsoft to culminate successful 1 aliases much suits revenge against nan company. After that, it’s anyone’s conjecture what mightiness happen. The authorities could inquire that Microsoft beryllium surgery into pieces — possibly lopping disconnected its AI arm. It could moreover inquire that nan unreality arsenic good arsenic AI beryllium turned into their ain businesses. Or it could spell a softer way by fining nan institution billions of dollars and forcing it to alteration its business practices.

Either way, difficult times are apt up for Microsoft. The large mobility will beryllium whether CEO Satya Nadella tin upwind nan turbulence amended than Bill Gates and Steve Ballmer did erstwhile nan erstwhile national suit against nan institution laid it debased for a decade.