FTC Targets Microsoft’s Cloud Practices Amid Rising Scrutiny of Big Tech

Introduction

According to the Financial Times (FT), the Federal Trade Commission (FTC) is preparing to investigate Microsoft’s Azure Cloud Computing Service due to allegations of anticompetitive business practices. Given the public consensus on scrutiny of big tech companies, this is a good opportunity to discuss the major cloud computing providers – Microsoft, Amazon, and Google – and explore their history and recent ongoings.

Microsoft’s venture

Microsoft Azure is the company’s cloud service. It was released in 2010 under the name of “Windows Azure”, which was updated in 2014 to the current name, reflecting its wider range of capabilities outside of Windows. The service was created to assist developers in the production and publication of software using Microsoft’s digital infrastructure. Since then, Azure has developed into a full platform that provides a variety of cloud-based services, such as storage, AI, data processing, and much more. According to Statista, Azure holds 20% of the global market share in the cloud-computing industry.

The FTC is currently deciding whether or not Microsoft is using its dominance in the cloud industry to suppress competition. Microsoft is allegedly enforcing strict licensing requirements that prevent customers from transferring their data to competitor services. FT claims that the FTC is looking at allegations of poor business practices such as large exit fees, hiked subscription fees for those customers departing from Azure, and making Office 365 services incompatible with rival services. These acts would help Microsoft to keep its share of the cloud services pie without innovating its service.

Amazon’s Expansion

Amazon Web Services (AWS) was established in 2006 and provided customers with scalable cloud architecture. Moreover, AWS aided companies by encouraging reliance on Amazon’s cloud servers rather than using physical ones. This transition helped to reduce business costs. This practice rapidly gained appreciation due to its flexibility and pay-as-you-go pricing structure. Overtime, AWS added databases, analytical tools, AI, and other services. According to Statista, AWS holds 31% of the global market share in the cloud-computing industry, making it the largest company in the scene.

There isn’t too much recent news on AWS; with its creation of GenAI in 2023, which helps businesses develop tools for processes like customer service automation and continual data analysis, AWS has been able to use this technology to continually grow. The service saw revenue and profits increase by 19.1% and 49.7% respectively, from Q3 of 2023 to Q4 of 2024. This has helped AWS to keep its market leadership in the ever-changing cloud market, and so the company may further benefit from continual innovation with a competitor under scrutiny.

Google’s work

Google Cloud Platform (GCP) debuted in 2008, offering services like Google App Engine to developers who wanted to publish applications online. GCP gradually expanded to encompass a wide range of tools, following suit with Azure and AWS. GCP does however differ from these two due to the services utilisation of Google’s search engine. According to Statista, GCP holds 12% of the global market share in the cloud-computing industry, making it the smallest of the 3, but a formidable power in the sector.

The FTC doesn’t seem to be the only thing against Microsoft; Google has accused Microsoft of anticompetitive practices that prevent customers from migrating from Azure to other cloud services in a complaint to the European Commission in late September 2024. Google is clearly working with its own interests in mind – GCPs revenue grew by 35% in the year leading up to Q3 2024, and so Google seemingly wants to make sure that Microsoft’s supposed anticompetitive behaviour doesn’t prevent Google’s continual expansion.

Conclusion

The cloud-computing market is huge and continually expanding. According to Statista, the public cloud services market size is predicted to increase from $561.1 billion in 2023 to $675.43 billion by the end of 2024. Microsoft, Amazon, and Google collectively control two-thirds of the world market, and so it is imperative that regulatory agencies such as the FTC and Competition and Markets Authority (CMA) keep a careful eye on their business activities. Oversight is necessary to prevent unfair practices from damaging competition in the industry. Research and regulation will be crucial in maintaining a level playing field for all companies in the cloud sector.

By William Payne