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In brief: The US Federal Trade Commission has spent weeks investigating Microsoft’s cybersecurity deals with the federal government. Although the case’s fate under the incoming Trump administration remains uncertain, the Commission continues to pursue it, illuminating the tech giant’s alleged strategy of locking government customers into its products to block competition.
Microsoft has received a subpoena to turn information over to the US Federal Trade Commission amid accusations of anticompetitive behavior. The company’s wide-ranging cybersecurity agreement with multiple federal agencies may violate antitrust law.
The investigation follows a ProPublica report detailing how the firm convinced the government to convert much of its digital infrastructure to Microsoft products after the 2020 SolarWinds cyberattack. The company is accused of bypassing the traditional contract bidding process, sticking federal customers with expensive subscription fees, and rendering migration to competitors like Google or Amazon prohibitively difficult.
Following SolarWinds, the White House summoned the heads of Microsoft, Amazon, Google, and other big tech names to discuss strategies for improving US cybersecurity. In response, Microsoft offered to help various government sectors upgrade to its highest-quality security products.
Although using Microsoft’s cybersecurity systems was initially free, steep subscription prices were triggered once the trial periods ended. By this point, the numerous divisions using Microsoft’s products, including the military, had become so accustomed to them that they paid instead of switching.
As reported last month, Microsoft’s cloud business, Azure, is a primary focus of the FTC’s investigation. Federal divisions that switched to the company’s platform eventually bought more products that ran on Azure. A former Microsoft salesperson compared the process to getting a customer addicted to crack.
Critics argue that the arrangement makes the government too dependent on Microsoft, locking out competitors and increasing the potential for a cascade of security failures. A traditional round of bidding followed by a heterogeneous security policy might have lowered prices and boosted cybersecurity resilience.
Moreover, the SolarWinds hack occurred due to a vulnerability in Microsoft’s software. The company claimed that its higher subscription tiers would have prevented the incident, but it had ignored warnings about the flaw years earlier.
Some suspect that Microsoft’s free trials might amount to illegal gratuities, but the company considers it a “100 percent discount” added to pre-existing contracts. Assuming the FTC’s investigation survives into the oncoming administration, clearly defining the terms of the deal could prove to be a focal point of the case.
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