FTC Launches Antitrust Probe into Microsoft’s Cloud and AI Market Dominance

The U.S. Federal Trade Commission (FTC) has formally initiated a sweeping antitrust investigation into Microsoft’s dominance in the enterprise cloud and artificial intelligence markets, according to a report by The Register. The agency has issued civil investigative demands (CIDs) to multiple competitors, requesting detailed documentation on licensing agreements, AI model training expenses, and business practices that may have created barriers to market entry for smaller players.

The probe, which marks a significant escalation in regulatory scrutiny of Big Tech, centers on whether Microsoft leverages its entrenched position in enterprise software—particularly through Azure, Office 365, and its AI integrations—to unfairly disadvantage rivals. Sources within the industry suggest the FTC is examining whether Microsoft ties its cloud services to proprietary AI tools in ways that make it economically unfeasible for competitors to offer equivalent solutions without access to Microsoft’s infrastructure.

According to The Register, the FTC is particularly interested in how Microsoft structures its licensing deals with large enterprises. Internal documents obtained by regulators allegedly show that customers who commit to long-term Azure contracts receive preferential pricing and early access to AI models like Phi-3 and Copilot, while competitors are locked out of similar arrangements. This practice, critics argue, creates a self-reinforcing cycle: the more enterprises use Microsoft’s ecosystem, the more data flows into its AI models, making them smarter—and harder to replicate.

Compounding concerns is the issue of training costs. Microsoft’s ability to train foundational AI models on proprietary datasets from its vast software ecosystem gives it a significant advantage over startups and mid-sized firms that must rely on public data or pay exorbitant fees for access to licensed data. The FTC is investigating whether Microsoft’s control over enterprise data pipelines constitutes an unlawful leveraging of market power.

Meanwhile, the agency is also scrutinizing Microsoft’s partnerships with major cloud infrastructure providers and AI startups. Reports indicate that some firms have been pressured into exclusivity agreements, limiting their ability to collaborate with Amazon Web Services or Google Cloud. One unnamed competitor told The Register that Microsoft offered "substantial volume discounts" in exchange for a two-year commitment to not integrate competing AI tools into their platforms—a practice that may violate Section 1 of the Sherman Antitrust Act.

On its official website, the FTC reaffirmed its commitment to enforcing antitrust laws in digital markets. "The Commission is vigilant in ensuring that innovation is not stifled by monopolistic conduct," stated an FTC spokesperson. "We are examining whether market leaders are using their dominance to foreclose competition rather than compete on merit."

Industry analysts warn that if the FTC finds sufficient evidence of anti-competitive behavior, Microsoft could face structural remedies, including forced divestitures or mandatory licensing of AI models to competitors. "This isn’t just about cloud infrastructure—it’s about control over the next generation of enterprise AI," said Dr. Elena Rodriguez, a technology economist at Stanford. "If Microsoft controls the data, the models, and the distribution channels, it effectively owns the future of business automation."

The investigation also coincides with growing public concern over the homogenization of AI outputs. In a related piece, The Register explored the phenomenon of "semantic ablation," where AI-generated content becomes increasingly uniform due to reliance on dominant platforms’ training data. This, experts say, could lead to a monoculture of thought in enterprise software, further entrenching Microsoft’s influence.

Microsoft has not yet issued a formal response to the FTC’s demands, though company executives have previously stated that their business practices are "open, fair, and compliant with all applicable laws."

As the probe enters its next phase, competitors such as Oracle, Salesforce, and open-source AI initiatives are expected to submit testimony. The outcome could set a precedent for how antitrust regulators approach AI-driven market dominance in the 2020s—a defining issue for the future of digital competition.