FTC to launch investigation into Microsoft’s cloud business

The FTC also highlighted fees charged on users transferring data out of certain cloud systems and minimum spend contracts, which offer discounts to companies in return for a set level of spending.

Microsoft has also attracted scrutiny from international regulators over similar matters. The UK’s Competition and Markets Authority is investigating Microsoft and Amazon after its fellow watchdog Ofcom found that customers complained about being “locked in” to a single provider, which offers discounts for exclusivity and charge high “egress fees” to leave.

In the EU, Microsoft has avoided a formal probe into its cloud business after agreeing a multimillion-dollar deal with a group of rival cloud providers in July.

The FTC in 2022 sued to block Microsoft’s $75 billion acquisition of video game maker Activision Blizzard over concerns the deal would harm competitors to its Xbox consoles and cloud-gaming business. A federal court shot down an attempt by the FTC to block it, which is being appealed. A revised version of the deal in the meantime closed last year following its clearance by the UK’s CMA.

Since its inception 20 years ago, cloud infrastructure and services has grown to become one of the most lucrative business lines for Big Tech as companies outsource their data storage and computing online. More recently, this has been turbocharged by demand for processing power to train and run artificial intelligence models.

Spending on cloud services soared to $561 billion in 2023 with market researcher Gartner forecasting it will grow to $675 billion this year and $825 billion in 2025. Microsoft has about a 20 percent market share over the global cloud market, trailing leader Amazon Web Services that has 31 percent, but almost double the size of Google Cloud at 12 percent.

There is fierce rivalry between the trio and smaller providers. Last month, Microsoft accused Google of running “shadow campaigns” seeking to undermine its position with regulators by secretly bankrolling hostile lobbying groups.

Microsoft also alleged that Google tried to derail its settlement with EU cloud providers by offering them $500 million in cash and credit to reject its deal and continue pursuing litigation.

The FTC and Microsoft declined to comment.

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