FTC Accelerates Antitrust Probe Into Microsoft's Cloud and AI Dominance

The U.S. Federal Trade Commission (FTC) has accelerated its antitrust investigation into Microsoft's cloud computing and artificial intelligence operations, according to sources familiar with the matter. The probe focuses on whether Microsoft leveraged its dominance in enterprise software and cloud infrastructure to stifle competition in the rapidly consolidating AI market. This development marks a significant escalation in regulatory scrutiny of big tech's control over foundational computing layers.

At issue is Microsoft's integration of AI capabilities across its Azure cloud platform, Office 365 productivity suite, and other enterprise offerings. Regulators are examining whether Microsoft uses proprietary data and technical dependencies to lock customers into its ecosystem while limiting interoperability with competing services. Particular attention is being paid to Microsoft's strategic partnerships with AI startups like OpenAI, through which Microsoft effectively controls critical infrastructure for emerging AI services.

Evidence gathered by investigators reportedly includes documentation of enterprise licensing agreements that bundle Azure credits with preferential access to Microsoft's AI tools. Additionally, the FTC is analyzing whether Microsoft's control over development frameworks like .NET and proprietary data formats creates barriers for competitors. This technical lock-in strategy, critics argue, replicates Microsoft's 1990s playbook where bundling Internet Explorer with Windows crushed competing browsers.

Microsoft contends its approach drives innovation, noting that Azure supports multiple AI frameworks including open-source alternatives. In a recent corporate blog post, executives highlighted Azure's compatibility with competitors' models and emphasized customer choice. However, antitrust scholars point to Microsoft's 54% share of the enterprise cloud market and its position as the primary infrastructure provider for 70% of major AI startups as indicators of problematic market concentration.

The probe arrives amid parallel investigations into Microsoft's $68.7 billion acquisition of Activision Blizzard and its deepening OpenAI partnership. This acceleration suggests regulators are connecting dots between traditional software dominance and emergent AI control points. Unlike previous antitrust actions focused on consumer harm, this investigation centers on developer access and innovation suppression – specifically whether Microsoft's practices prevent competing AI services from reaching enterprise customers.

Potential outcomes range from consent decrees mandating API interoperability to structural separation of Microsoft's cloud and AI divisions. The FTC's accelerated timeline suggests preliminary findings could emerge before the end of 2026. With AI infrastructure increasingly dictating competitive advantage across industries, this case may establish precedent for regulating foundational technologies that shape entire economic sectors.

As cloud and AI converge into the new operating system of business, regulators appear determined to prevent history from repeating itself. The probe's outcome will test whether antitrust frameworks built for the desktop era can constrain platform power in the age of intelligent infrastructure.