FTC probe targets Microsoft’s business model in Lina Khan’s last stand

[Simone Del Rosario]

It might be FTC Chair Lina Khan’s last stand. 

The Federal Trade Commission launched a sweeping investigation into Microsoft, according to multiple reports. 

A demand for information that is “hundreds of pages long” drills “into everything from the company’s cloud computing and software licensing businesses to cybersecurity offerings and artificial intelligence products,” according to Bloomberg. 

The investigation comes after more than a year of preparation but less than two months before a new administration. 

Antitrust enforcers have stretched the boundaries under President Joe Biden, with 35-year-old Lina Khan leading the charge at the FTC. 

Her latest shot at Microsoft, the world’s third-largest company, will drill into a longstanding criticism of Microsoft … that bundling its services makes it hard for other companies to compete. 

For instance, for years Slack and Zoom have complained about Microsoft bundling Teams with the likes of Word and Excel, and for free. 

These antitrust complaints gained steam in the European Union, where a year ago Microsoft agreed to unbundle Teams from Office 365 in the European Economic Area. Six months later, they made the change globally. 

Khan’s team will also look closely at Microsoft’s growing power in the AI space. Microsoft is the largest investor in OpenAI, the company behind ChatGPT. 

The latest investigation comes after Khan lost a major case trying to block Microsoft from acquiring Activision Blizzard for $69 billion. 

Lina Khan: We obviously are bringing cases when we think there’s a law violation … and are staying far away from that line. 

Simone Del Rosario: This latest look into Microsoft comes about a quarter century after the Justice Department tried to break up the Big Tech giant. They later settled for a less extreme antitrust solution. 

As for Khan, it is widely believed she’ll be out the door with the incoming Trump administration, despite being able to call Vice-president elect JD Vance one of her fans. 

Former FTC Chair Bill Kovacic tells me while she may be on the outs, a part of her will remain. 

Bill Kovacic: I think at a high level, the change in the debate, the change in the intellectual vision that she brought to the job is going to have a long life, and that’s going to that’s going to persist, how it manifests itself in individual cases, it’s hard to tell, but she has carried out the very important task of changing the way that elected officials and others think about what the FTC should do.