Competitors complain Microsoft locks customers into its cloud service

Microsoft is facing increasing criticism from competitors over allegations that it is using its dominant position in the cloud services market to lock customers into its ecosystem. Rivals have accused the tech giant of leveraging unfair practices that make it difficult for customers to migrate to alternative cloud providers, raising concerns about anti-competitive behavior.

According to the sources, the U.S. Federal Trade Commission has opened a broad antitrust investigation into Microsoft including its software licensing and cloud computing businesses. Central to these complaints are Microsoft's licensing terms and software agreements, which reportedly impose restrictive conditions on users who wish to run Microsoft software on non-Microsoft cloud platforms. Competitors argue that these terms not only inflate costs for customers but also create unnecessary technical and administrative hurdles, discouraging them from exploring other options in the cloud services market.

Critics also claim that Microsoft's bundling of services and discounts for customers who commit exclusively to its Azure platform unfairly skews the competitive landscape. Smaller cloud service providers argue that such practices give Microsoft an undue advantage, stifling innovation and limiting customer choice.

Regulators worldwide have begun to take notice of these concerns. Several antitrust authorities, particularly in Europe, are investigating Microsoft's cloud practices as part of broader efforts to ensure a level playing field in the technology sector. Competitors are calling for stricter oversight and regulatory action to prevent monopolistic behavior and foster healthy competition in the cloud industry.

The probe was approved by FTC Chair Lina Khan ahead of her likely departure in January. The election of Donald Trump as U.S. president, and the expectation he will appoint a fellow Republican with a softer approach toward business, leaves the outcome of the investigation up in the air.

The FTC is examining allegations the software giant 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, sources confirmed earlier this month.

Though Microsoft has declined to comment, competitors have criticized Microsoft's practices they say keep customers locked into its cloud offering, Azure. Also, 
NetChoice, a lobbying group that represents online companies including Amazon and Google, which compete with Microsoft in cloud computing, criticized Microsoft's licensing policies, and its integration of AI tools into its Office and Outlook.

Google in September complained to the European Commission about Microsoft's practices, saying it made customers pay a 400% mark-up to keep running Windows Server on rival cloud computing operators, and gave them later and more limited security updates. Media reports claim that the FTC has demanded a broad range of detailed information from Microsoft.