Microsoft faces FTC antitrust probe over AI and licensing practices
The probe could reshape AI competition, influence software licensing rules, and impact enterprise technology strategies.
Published on 17th March 2025
The US Federal Trade Commission (FTC) is reportedly pressing ahead with an antitrust investigation into Microsoft, a move that could reshape competition in AI and productivity software.
As part of the probe, the FTC has issued a civil investigative demand requiring Microsoft to disclose extensive data on its AI operations, including the cost of acquiring data and training models dating back to 2016, Bloomberg News reported.
Regulators are also seeking information on Microsoft’s data centers, challenges in securing sufficient computing power to meet customer demand, and its software licensing practices.
Launched last year under former FTC Chair Lina Khan, the investigation is also examining Microsoft’s decision to cut funding for its in-house AI projects after partnering with OpenAI — a move that could be viewed as limiting competition in the rapidly growing AI sector.
Khan authorised the inquiry before leaving office, with Andrew Ferguson assuming the chairmanship following President Donald Trump’s inauguration in January.
Implications for the industry
The probe into Microsoft could offer new insights into the company’s reliance on OpenAI’s models and its level of influence over the AI startup.
The findings may have far-reaching consequences for competition and the balance of power in the AI sector, including how open Microsoft is to integrating other models into its OS and software for Copilot, said Neil Shah, co-founder of Counterpoint Research. “It’s the ‘search’ wars all over again. This could have multiple implications, ranging from the integration of third-party models and the flexibility to power Copilot, which may raise optimization and security concerns for enterprises, to the pricing of Copilot and its integrated services,” he said.
Beyond AI integration, the investigation could reshape competitive dynamics in cloud computing and enterprise software.
Changes to Microsoft’s licensing terms or business practices may alter pricing strategies and introduce regulatory hurdles for cloud and AI providers.
“The FTC’s antitrust investigation into Microsoft’s cloud services and AI partnerships could definitely lead to regulatory interventions affecting licensing terms, pricing models, and competition in the enterprise AI and cloud services market,” said Mukesh Ranjan, vice president at Everest Group. “Enterprises relying on Microsoft may face disruptions or increased costs as licensing agreements are revised.”
Heightened regulatory scrutiny of Microsoft’s partnership with OpenAI could also fuel greater competition in the AI sector, benefiting rival service providers.
“We are already seeing significant innovation in this space post the release of DeepSeek,” Ranjan added. “For example, Google recently unveiled Gemma 3, an advanced AI model designed to operate efficiently on a single GPU, which it claims to be much better than OpenAI offerings.”
Effects in the enterprise
Analysts advise adopting a wait-and-see approach regarding the potential effects of the antitrust probe.
“The biggest potential impact would be reducing OpenAI’s role as the default AI provider for Microsoft products,” said Hyoun Park, CEO and chief analyst at Amalgam Insights. “Microsoft has already begun diversifying, and its partnership with OpenAI is not as tight as it was a year ago. Recent shifts toward agentic AI and open-source models have made ChatGPT less competitive as an enterprise tool, pushing Microsoft to develop independent AI solutions.”
If the investigation results in sanctions, businesses will need to monitor which AI model providers gain broader access to Microsoft’s ecosystem or whether the company will be forced to develop its own models.
“But cynically, this move appears to be an attempt to slow down OpenAI in the short term, as the AI market remains highly dynamic, with no company guaranteed to maintain its leadership over the next three to five years,” Park added.
Notably, while the probe began earlier, its timing now is particularly significant as it unfolds while OpenAI prepares to play a pivotal role in the Stargate initiative, with Elon Musk’s Grok emerging as a potential competitor.
