The Federal Trade Commission (FTC) would investigate Microsoft like in 1998. In the final days of the Biden administration, the investigation of outgoing President Lina Khan would gain momentum, according to ProPublica. The FTC is particularly concerned about Microsoft’s bundling of ubiquitous products Office Products with cybersecurity and cloud computing services. This includes a deal to upgrade government bundles for a limited time, which essentially had the effect of using a government cybersecurity crisis to sell more licenses.
It adds more details to the reports Bloomberg and the Financial Times in November over an FTC investigation into the Windows maker. The publications say Microsoft’s competitors have complained that bundling its popular software with cloud services made it harder to compete. ProPublica claims that FTC lawyers have recently interviewed and scheduled meetings with Microsoft’s competitors.
Microsoft has confirmed ProPublica that the FTC issued a civil investigative demand (essentially a subpoena), requiring the company to turn over information related to the case. A Microsoft spokesperson told the publication — without providing official examples — that the FTC document is “broad, far-reaching, and demands that things that are outside the realm of possibility even make sense.”
The investigation follows a ProPublica Report in November about how Microsoft appeared to be exploiting a series of cyberattacks to sell more licenses to the U.S. government. Following a meeting with President Biden in the summer of 2021, the company reportedly offered to upgrade existing government bundles (including Windows and its Office suite) to a more expensive version adding its advanced products from cybersecurity. Microsoft also sent consultants to install the upgrades and train employees how to use them.
Many divisions of the U.S. government agreed – including all military services within the Department of Defense – and then began paying for the more expensive bids after the trial ended. (The difficulty of switching to another cybersecurity product after the trial ended virtually guaranteed that this would be the case.) ProPublica The account essentially describes Microsoft as exploiting a cybersecurity crisis to increase its sales and improve its bottom line. Just some late-stage capitalism stuff, y’all.
Ironically, the sales tactic was the result of, you guessed it, security flaws on Microsoft’s part. Biden’s demand for big tech executives to strengthen government cybersecurity follows the SolarWinds attack that exploited a vulnerability in a Microsoft identity service. The company knew the app contained a “security nightmare” that allowed hackers to impersonate legitimate employees and investigate sensitive information without arousing suspicion. But fixing the flaw would add friction to government connections when the company was competing for U.S. contracts. Microsoft reportedly chose to remain silent rather than risk losing business.
According to experts who spoke with ProPublicathe government’s trial sales program could have violated contract and competition regulations. The publication reports that even Microsoft’s lawyers feared the deal would raise antitrust concerns.
If this sounds familiar, it echoes the government’s statement 1998 antitrust lawsuit against Microsoft. The bundling was also a star of that show, with the FTC accusing the company of engaging in anticompetitive practices by including Internet Explorer with Windows, a move seen in the early days of the Internet as stifling. rivals like Netscape.
