The FTC’s Microsoft antitrust probe focuses on software bundling

The Federal Trade Commission (FTC) is reportedly investigating Microsoft as far back as 1998. In the waning days of the Biden administration, the probe of outgoing chair Lina Khan is said to be picking up steam, according to ProPublica. The FTC is particularly concerned about Microsoft’s ubiquitous bundling Office products with cybersecurity and cloud computing services. That includes an agreement to upgrade government packages for a limited time, which essentially had the effect of using a government cybersecurity crisis to sell more licenses.

Add more detail to reports from Bloomberg and the Financial Times in November about an FTC probe into the Windows manufacturer. The publications said that Microsoft’s competitors complained that its bundling of its popular software with cloud services made it harder to compete. ProPublica says FTC lawyers have recently interviewed and scheduled meetings with Microsoft competitors.

Microsoft has confirmed ProPublica that the FTC issued a civil investigative demand (essentially a subpoena), forcing the company to hand over information related to the case. A Microsoft spokesperson told the publication — without providing examples on the record — that the FTC document is “broad, sweeping, and asking for things that are beyond the realm of possibility to even be logical.”

The investigation follows a separate ProPublica report since November about how Microsoft appeared to exploit a series of cyberattacks to sell more licenses to the US government. After a meeting with President Biden in the summer of 2021, the company said it proposed to upgrade the government’s existing packages (including Windows and its Office suite) to a more expensive version that would add its advanced products of cyber security. Microsoft also sent consultants to install the updates and train employees to use them.

Many divisions of the US government accepted – including all the military services of the Department of Defense – and then began to pay for the most expensive bundles after the end of the process. (The hassle of switching to a different cybersecurity product after the trial ends is practically guaranteed to be the case.) ProPublica account essentially portrays Microsoft as exploiting a cyber security crisis to expand sales and pad its bottom line. Just the stuff of late capitalism, everyone.

Ironically, the sales tactic resulted from security lapses by – you guessed it – Microsoft. Biden’s call for Big Tech leaders to strengthen government cybersecurity followed the SolarWinds attack that exploited a vulnerability in a Microsoft identity service. The company learned that the app contained a “security nightmare” that allowed hackers to impersonate legitimate employees and probe for sensitive information without arousing suspicion. But patching the flaw would add friction to government logins when the company was competing for US contracts. Microsoft said it opted to stay mum rather than risk losing the business.

According to the experts who spoke ProPublicathe government’s trial sales scheme may have breached regulations on contract and competition. The publication said that even Microsoft lawyers worried that the deal would raise antitrust concerns.

If that sounds familiar, it echoes the government 1998 antitrust litigation against Microsoft. Bundling was also a star of that show, with the FTC accusing the company of engaging in anti-competitive practices by bundling Internet Explorer with Windows, a move seen in those early days of the internet as stifling. rivals like Netscape.