The Federal Trade Commission (FTC) has dramatically escalated its antitrust investigation into Microsoft, marking a significant intensification of regulatory pressure on the tech giant in 2026. On Friday, the agency issued a fresh wave of civil investigative demands (CIDs) to Microsoft's competitors, seeking detailed evidence of how the company may be weaponizing its dominance in enterprise software to monopolize the emerging AI and cloud computing markets. This latest move signals that the crackdown on Big Tech remains a priority under the new leadership of FTC Chairman Andrew Ferguson.
Regulators Target Copilot and Cloud Licensing
According to sources familiar with the matter, the FTC sent legally binding requests for information to at least six major rival firms in the cloud and business software sectors. The inquiry specifically zeroes in on Microsoft’s licensing practices and the aggressive bundling of its AI-powered Copilot tools with ubiquitous products like Windows and Office 365. Regulators are concerned that these strategies are designed to lock corporate customers into the Azure ecosystem, making it financially and technically prohibitive to switch to competitors like Amazon Web Services (AWS) or Google Cloud.
The Microsoft FTC investigation has broadened in scope since it was first opened in late 2024. Investigators are now scrutinizing whether Microsoft is artificially inflating the cost of running its software on rival clouds—a practice critics call a "tax" on competition. Furthermore, the probe is examining allegations that Microsoft is using its legacy dominance in operating systems to force-feed its new AI tools to the market, effectively suffocating standalone AI competitors before they can gain a foothold.
The AI Angle: Is Microsoft Killing Innovation?
A focal point of the expanded Microsoft Copilot probe is the company's relationship with OpenAI and its internal product strategy. The FTC is investigating whether Microsoft intentionally scuttled its own internal AI development projects to favor its partnership with OpenAI, thereby eliminating potential competition in the generative AI space. By integrating Copilot deeply into the fabric of enterprise IT—from security to identity management—Microsoft is accused of creating a "walled garden" that leaves no room for alternative AI solutions.
Competitors Weigh In
Industry rivals have long complained that Microsoft’s bundling tactics violate the principles of enterprise software competition. Executives from competing firms argue that by tying essential security and identity services to its cloud offerings, Microsoft leaves Chief Information Officers (CIOs) with little choice but to adopt the full Azure stack. "They are using their monopoly in one market to conquer another," said one industry insider who received a CID. This sentiment echoes the complaints that led to the historic antitrust battles of the 1990s, suggesting that history may be repeating itself in the age of AI.
Bipartisan Scrutiny: Ferguson Continues the Crusade
The escalation comes as a surprise to some analysts who expected a relaxation of antitrust enforcement in 2026. However, the appointment of Andrew Ferguson as FTC Chair has proven that Big Tech regulation 2026 is a bipartisan issue. While the investigation began under former Chair Lina Khan, Ferguson has picked up the torch, demonstrating that the concern over concentrated corporate power transcends political lines. The continuation of this probe highlights a consensus in Washington: the unchecked expansion of cloud and AI monopolies poses a systemic risk to the American economy.
The FTC antitrust Microsoft AI inquiry is not just about punishment; it could lead to significant structural remedies. If the FTC finds evidence of illegal monopolization, it could sue to block certain bundling practices or, in an extreme scenario, force the divestiture of specific business units. For Microsoft, the stakes are higher than ever as it bets its future on the AI revolution.
What’s Next for Microsoft and the Cloud Market?
Microsoft has defended its practices, arguing that its integrated solutions provide superior security and value to customers. The company points to its 2024 agreement with European cloud providers as evidence of its willingness to address interoperability concerns. However, U.S. regulators appear unconvinced that voluntary measures are sufficient to protect the Microsoft cloud monopoly from abusing its power.
As the investigation proceeds, the tech industry is bracing for a protracted legal battle that could define the rules of the road for the next decade of digital innovation. With the FTC now armed with subpoena power and a clear mandate, 2026 is shaping up to be a defining year for the future of competition in the cloud.
