The Federal Trade Commission has widened a two-year-old antitrust investigation into Microsoft to formally cover cloud computing, artificial intelligence, and software bundling, according to reporting published June 1, 2026 by CIO, which cited new documents obtained by The Verge. The expanded inquiry pulls Microsoft Entra ID, cloud licensing terms, and the Copilot AI assistant into a probe that began as a civil investigative demand in November 2024, and it lands as Microsoft’s cloud business fights Amazon Web Services and Google Cloud for share in a market that hit $129 billion in quarterly spending in the first quarter of 2026.
Neither Microsoft nor the FTC has commented publicly on the confidential proceeding. But the timing is hard to ignore. This is the same regulator that spent roughly 19 months suing to block Microsoft’s $69 billion acquisition of Activision Blizzard before dropping the case in May 2025, and the complaint at the center of the new probe – that Microsoft’s licensing terms make it expensive or technically awkward to run its software on rival clouds – is nearly identical to one that European cloud providers already forced Microsoft to partially settle for roughly $21.7 million back in 2024.
Don't miss new tech stories on Google
Add Tech Insider once in the Google app and our stories appear in your news suggestions.
What the FTC Is Investigating at Microsoft
The current Microsoft antitrust probe examines whether the company uses its dominant position in productivity software to make switching away from Azure harder, costlier, or technically impractical for enterprise customers, according to the CIO report. Investigators are examining licensing terms, interoperability barriers, and product bundling across four areas: cloud computing services, software licensing, cybersecurity offerings, and AI products, Copilot included.
A central piece of the inquiry involves Microsoft Entra ID, the identity and access management platform formerly known as Azure Active Directory, which authenticates users across both Microsoft’s own cloud software and countless third-party enterprise applications. Regulators want to know whether Entra ID’s pricing and technical design push customers toward keeping workloads on Azure rather than moving them to AWS or Google Cloud. The FTC is also looking at how Microsoft bundles Office, Windows security tooling, and identity services together with cloud subscriptions in ways critics say raise the effective cost of leaving Azure behind.
Timeline: From a Quiet 2024 Filing to a Six-Rival Sweep
This Microsoft antitrust probe did not start in 2026. The FTC opened it in November 2024, in the final weeks of the Biden administration under then-chair Lina Khan, issuing an initial civil investigative demand that has since been reported to request records spanning nearly a decade, from 2016 through 2025.
On March 12, 2025, under the Trump-era FTC’s new leadership, Reuters reported the agency had moved to advance rather than drop the Microsoft investigation – a decision Fortune also covered at the time – notable given that the same FTC, months later, would abandon its Activision Blizzard case entirely. By the end of 2025 the probe remained open with no fines, settlement, or formal remedies imposed, according to Samexpert, and the inquiry stayed mostly out of public view for the rest of the year.
That changed on February 13, 2026, when Bloomberg Law reported the FTC had ratcheted up scrutiny, sending civil investigative demands to at least six of Microsoft’s competitors in cloud and enterprise software, asking pointed questions about licensing practices, interoperability, and AI products – intensified scrutiny of Microsoft’s AI and cloud licensing that Reuters and Creati.ai also corroborated that same February 2026. Microsoft shares fell 0.6% in after-hours trading following the initial Bloomberg report on the escalation. The June 1, 2026 CIO report, drawing on newly reviewed documents, confirmed the probe’s scope now explicitly spans cloud bundling, Entra ID, and Copilot.
Inside the Civil Investigative Demands
Civil investigative demands, or CIDs, are the FTC’s version of a subpoena in antitrust matters – legal instruments compelling companies to hand over documents, data, and sworn answers before any formal complaint is ever filed. The original CID sent to Microsoft reportedly ran to hundreds of pages, with individual sections containing more than 15 multi-part questions covering licensing agreements, pricing models, and technical interoperability commitments dating back to 2016.
The February 2026 round went further, reaching outward to rivals instead of just Microsoft itself. Bloomberg and Reuters both reported the agency contacted at least six companies that compete with Microsoft in cloud infrastructure and enterprise software, seeking their perspective on how Microsoft’s licensing and bundling practices affect their ability to win and keep customers. Neither outlet named the six companies, and none of the parties involved has issued an on-the-record statement about the demands, consistent with how confidential FTC investigations typically proceed.
Microsoft Entra ID and the Bundling Complaint
Entra ID sits at the center of the bundling complaint because identity management is effectively invisible infrastructure, the layer that decides who can log into what, and it is genuinely difficult for a large enterprise to rip out once deployed. The theory regulators are testing is that Microsoft prices Entra ID and related security tools so that the full Microsoft stack ends up cheaper than mixing Azure identity services with workloads run on AWS or Google Cloud, even in cases where the underlying compute and storage costs would otherwise favor a competitor.
This is not a new theory. It closely mirrors the complaint that the Cloud Infrastructure Services Providers in Europe, or CISPE, brought to the European Commission in November 2022, which centered on Microsoft software licensing terms that CISPE said penalized customers for running Microsoft workloads on non-Azure infrastructure. Microsoft’s cloud segment has grown enormously since that complaint was filed, which is part of why regulators on both sides of the Atlantic keep circling back to licensing rather than raw market share as the more provable antitrust theory. For more on how that growth shows up in Microsoft’s own disclosures, see our coverage of Microsoft’s Azure earnings and backlog.
Copilot and the New AI Antitrust Frontier
This is one of the first major U.S. antitrust inquiries to treat a generative AI assistant as a potential bundling concern rather than purely as a product feature. By folding Copilot into the same inquiry as cloud and identity services, the FTC is signaling that it views AI distribution, not just AI model quality or safety, as a competition issue worth scrutinizing.
The AI angle is not isolated to this one probe. The Wall Street Journal has reported separately that the FTC opened a probe into whether Microsoft structured a roughly $650 million licensing arrangement tied to Inflection AI’s co-founder and staff in a way designed to sidestep a full merger review. The scrutiny has already reshaped one major relationship: Microsoft and OpenAI ended their exclusive license arrangement in April 2026 specifically to ease antitrust concerns in the U.S., U.K., and EU, according to Reuters, a move that came after consumers filed an antitrust class action on October 13, 2025 alleging the Microsoft-OpenAI deal had raised generative AI prices, also per Reuters. Taken together, the inquiries suggest the FTC is treating Microsoft’s AI expansion, whether through in-house products like Copilot or deals with AI labs, as an extension of the same market-power questions it has been asking about cloud since 2024.
Why Microsoft Stock Barely Flinched
Markets have seen this movie before. Microsoft shares dropped just 0.6% in after-hours trading when Bloomberg first reported the escalated FTC scrutiny in February 2026, a muted reaction for a company whose valuation leans heavily on continued Azure and AI growth. Investors have already watched the FTC pursue and then abandon a marquee case against Microsoft once: the agency’s attempt to block the Activision Blizzard acquisition failed at the Ninth Circuit on May 7, 2025, and the FTC formally dropped that matter, filed under Matter/File No. 2210077 and Docket No. 9412, on May 22, 2025, months after the The Microsoft-Inflection deal did not mean a $69 billion acquisition had already closed; Microsoft paid about $650 million to license Inflection’s technology and hire much of its staff, while Inflection remained a separate company.
That history has conditioned the market to treat FTC investigative activity as a multi-year process with an uncertain, and often company-favorable, outcome rather than an immediate threat to earnings. Antitrust probes of this kind can run for years before resulting in a formal complaint, a negotiated settlement, or no action at all.
The EU Precedent: What CISPE Already Won From Microsoft
If the FTC is looking for a template, it does not have to look far. The European fight covers almost identical ground to what U.S. investigators are now asking about, and it has already produced two separate settlements – and that’s before counting Microsoft’s separate EU exposure over Teams. As of September 12, 2025, the European Commission formally accepted Microsoft’s Teams remedy, letting the company sidestep an EU antitrust fine of up to 10% of global revenue, or roughly $24 billion, according to Reuters and Samexpert, and a related settlement that the European Commission confirmed the same day set a 1-8 euro monthly price gap – widened by 50% from the original proposal – between Office and Microsoft 365 sold with versus without Teams for seven years. Reuters further reported that Microsoft separately committed to improving Teams interoperability specifically for 10 years, part of broader compliance commitments legally binding for up to a decade, according to a May 16, 2025 Washington Times report.
CISPE filed its original complaint against Microsoft with the European Commission in November 2022. Nearly two years later, on July 11, 2024, Microsoft and CISPE announced a settlement worth roughly €20 million (about $21.7 million), under which Microsoft agreed to build a way for CISPE members to run Microsoft software on their own European infrastructure at prices comparable to Azure, with nine months to implement the fix and reimbursement for lost income over the prior two years. CISPE agreed to withdraw its EU complaint and not support similar complaints elsewhere as part of the deal.
That was not the end of it. On July 18, 2025, CISPE announced a second agreement with Microsoft that went further: qualifying CISPE members gained access to a pay-as-you-go licensing option through a program called CSP-Hoster, priced comparably to Azure, plus guarantees that Microsoft’s Services Provider License Agreement terms would hold for at least five years. Notably, AWS, Google Cloud, and Alibaba Cloud were explicitly excluded from the benefits of both CISPE settlements – the deals applied only to CISPE’s own European member companies, not to Microsoft’s biggest global cloud rivals, which is exactly the kind of gap U.S. regulators now appear to be probing on behalf of American competitors.
Cloud Market Share Snapshot, Q1 2026
Why any of this matters commercially comes down to scale. The global cloud infrastructure market hit $129 billion in quarterly spending in the first quarter of 2026, according to Synergy Research Group, an increase of more than $35 billion from the same period a year earlier and enough to push the market’s annualized revenue run rate above half a trillion dollars for the first time. Of that total, Microsoft Azure captured 21% of global cloud infrastructure spending in Q1 2026, trailing Amazon Web Services’ 28% share, the same Synergy Research Group report found.
Amazon Web Services remains the largest provider at 28% global market share, with Microsoft Azure second at 21% and Google Cloud third at 14%. Together, the three hyperscalers control 63% of worldwide cloud infrastructure spending, leaving the remaining 37% split across Oracle, Alibaba Cloud, IBM, and a long tail of smaller and regional providers. For a deeper breakdown of how the three platforms compare on price and performance, see our AWS vs Azure vs Google Cloud comparison. Any regulatory action that changes how easily enterprise customers can move workloads between these three platforms would touch a market of genuinely enormous size.
| Cloud Provider | Q1 2026 Global Market Share | Market Position | Source |
|---|---|---|---|
| Amazon Web Services | 28% | 1st | Synergy Research Group |
| Microsoft Azure | 21% | 2nd | Synergy Research Group |
| Google Cloud | 14% | 3rd | Synergy Research Group |
| All other providers combined | 37% | – | Synergy Research Group |
| Total quarterly cloud infrastructure spend | $129 billion | – | Synergy Research Group, Q1 2026 |
US vs EU: Two Regulatory Playbooks Compared
The U.S. and European approaches to essentially the same underlying complaint look almost nothing alike in practice. Brussels moved through the European Commission’s competition process to extract a negotiated settlement in under two years, without ever filing a public lawsuit. Washington’s FTC, by contrast, has spent 19 months issuing civil investigative demands without a public complaint, settlement, or lawsuit, a slower, more document-heavy process that historically can still end without any formal action at all.
| Date | Region | Development |
|---|---|---|
| Nov 2022 | EU | CISPE files formal complaint against Microsoft with the European Commission |
| Jul 2024 | EU | Microsoft-CISPE settlement worth ~€20M ($21.7M); 9-month implementation window |
| Nov 2024 | US | FTC opens broad antitrust probe covering Microsoft cloud, licensing, AI, security |
| Mar 2025 | US | FTC under new leadership confirms it will continue the Microsoft probe |
| Jul 2025 | EU | Second CISPE-Microsoft agreement adds pay-as-you-go licensing, 5-year SPLA guarantee |
| Feb 2026 | US | FTC sends civil investigative demands to 6+ Microsoft rivals on cloud and AI |
| Jun 2026 | US | Probe scope confirmed to formally cover cloud bundling, Entra ID, and Copilot |
Microsoft’s Long Antitrust History
Microsoft is no stranger to antitrust scrutiny. This is arguably the fourth distinct wave of it in three decades. United States v. Microsoft Corp., filed in 1998, accused the company of illegally protecting its Windows monopoly by bundling Internet Explorer, and it remains the reference case for U.S. tech antitrust law more than two decades later.
The most recent prior fight was the FTC’s attempt to block Microsoft’s acquisition of Activision Blizzard, the maker of Call of Duty. The FTC authorized an administrative complaint against the merger, sought a preliminary injunction to pause the deal, and lost: the Ninth Circuit affirmed the denial of that injunction on May 7, 2025, and the FTC dropped the matter entirely on May 22, 2025, roughly 19 months after the $69 billion acquisition had already closed in October 2023.
The current cloud and AI probe is structurally different from both precedents. It is not trying to block a merger, and it is not, at least not yet, alleging an operating-system monopoly. Instead, it echoes the theory European regulators already tested and partially resolved: that Microsoft’s software licensing terms, not market share alone, are what limit competition in cloud computing.
What Happens Next: Possible Outcomes
Antitrust investigations at the CID stage can resolve in several ways, and the FTC’s own recent history with Microsoft shows both ends of the spectrum. The agency could close the investigation without action if it does not find sufficient evidence of anticompetitive conduct. It could negotiate a consent order or settlement, similar in spirit to the CISPE deals in Europe, in which Microsoft agrees to specific licensing or interoperability changes without admitting wrongdoing. Or it could authorize a formal administrative complaint or federal lawsuit, as it did with Activision Blizzard, opening a legal process that could run for years before any resolution.
Given that the current FTC leadership already chose to continue rather than drop the Microsoft probe in March 2025, and has since escalated it by reaching out to rivals in February 2026, a quiet close looks less likely than it might have a year ago. But the CISPE experience in Europe suggests a negotiated settlement over specific licensing terms, rather than a blockbuster lawsuit, is the more probable landing point if the FTC acts at all. Regulatory pressure on cloud providers is not unique to Microsoft or the U.S. either; UK regulators moved in a different but related direction when they formally designated major cloud platforms as critical third parties subject to operational-resilience rules, and separately, a UK cloud licensing class action seeking £1.7-2.1 billion in damages reached tribunal in December 2025, according to Samexpert. That case follows a November 2025 UK Competition Appeal Tribunal ruling that perpetual Microsoft licenses can be legally resold, which Microsoft has appealed, and preceded a fast-moving run of UK regulatory action: the Competition and Markets Authority, which had already found in a July 2025 market study that AWS and Azure each held roughly 30%-40% of UK cloud infrastructure spending, opened a new Microsoft cloud licensing probe on March 31, 2026 that could result in a strategic market status designation for business software, per Reuters, then followed on May 14, 2026 with a second major investigation into Microsoft’s dominance in business software, again per Reuters – inquiries that together examine Microsoft’s bundling of Windows, Word, Excel, Teams, and Copilot. The UK litigation front is wider than one case: barrister Alexander Wolfson filed a Microsoft licensing class action in May 2025 alleging 10 years of overcharges, Computerworld reported, and in September 2026 a UK tribunal demanded documents in ValueLicensing’s £270 million Microsoft lawsuit, also per Computerworld.
What This Means for Enterprise Cloud Buyers
For IT and procurement teams currently negotiating Microsoft enterprise agreements, the practical impact today is limited: no rule has changed, and no settlement has been announced. Microsoft’s own packaging is moving regardless: according to Microsoft Partner Center, existing Microsoft 365 Copilot offers were renamed with “(add-on)” beginning October 16, 2026, and new Microsoft 365 Copilot and Microsoft 365 Copilot Business offers are scheduled to be purchasable without a qualifying Microsoft 365 base subscription on December 1, 2026. But the probe adds leverage to conversations that were already happening, and Microsoft’s rivals are now pressing that leverage directly in court: Slack and Salesforce sued Microsoft in London’s High Court on April 27, 2026, alleging anticompetitive Teams bundling within Office 365 and Microsoft 365, according to Reuters. European CISPE members used the threat, and then the reality, of regulatory pressure to negotiate specific, enforceable pricing and portability commitments from Microsoft, commitments that, notably, do not extend to non-CISPE cloud providers or to customers outside CISPE’s European membership.
U.S. enterprises weighing multi-cloud strategies now have a genuine regulatory data point to raise in licensing negotiations, even before the FTC reaches any conclusion. Cloud architects evaluating Entra ID against alternatives, or comparing Azure hybrid licensing benefits against running Microsoft workloads on AWS or Google Cloud, should expect Microsoft’s public statements and pricing flexibility on these specific points to keep shifting while the investigation remains open. Enterprises that already track cloud commitments closely, the way Pinterest did in its multi-year AWS infrastructure agreement, are the ones best positioned to use this moment to renegotiate rather than simply wait for regulators to act.
5 Predictions for the Microsoft Antitrust Probe
- More CIDs before a complaint. Expect additional civil investigative demands rather than a public complaint before the end of 2026. The FTC’s pattern so far, a CID in 2024 followed by rival outreach in 2026, points to continued fact-finding rather than imminent litigation.
- A settlement is more likely than a lawsuit. Microsoft’s playbook in Europe shows a preference for licensing concessions over courtroom fights, and the CISPE precedent gives the FTC a template it can adapt for the U.S. market.
- Any deal will be narrow, not structural. An eventual U.S. settlement will likely focus on licensing and interoperability terms rather than a breakup or divestiture, mirroring the CISPE agreements’ scope rather than the structural remedies once floated in the original 1998 Microsoft case.
- AWS and Google Cloud keep pushing for parity. Both were explicitly excluded from the 2024 and 2025 CISPE deals, giving them a direct commercial incentive to keep pressing U.S. regulators for the same portability guarantees European providers already won.
- Bundling, not Azure’s size, stays the central legal question. Bundling and interoperability, not raw market share, are the theories that have gained the most traction against Microsoft on both sides of the Atlantic, and that is likely to remain true as this probe develops.
Frequently Asked Questions
What is the FTC investigating Microsoft for in 2026?
The FTC is examining whether Microsoft’s cloud licensing, software bundling, and AI products, including Copilot and Microsoft Entra ID, make it harder or more expensive for enterprise customers to use competing cloud platforms like AWS or Google Cloud.
When did the FTC’s Microsoft antitrust probe start?
The FTC opened the investigation in November 2024 with an initial civil investigative demand. It broadened significantly in February 2026, when the agency began questioning Microsoft’s competitors, and its scope was confirmed to formally include cloud, AI, and bundling in reporting published June 1, 2026.
Has Microsoft settled a similar antitrust complaint before?
Yes. Microsoft settled a nearly identical complaint in Europe brought by CISPE, the Cloud Infrastructure Services Providers in Europe, paying roughly €20 million ($21.7 million) in July 2024 and agreeing to a second round of licensing reforms in July 2025. Separately, in September 2025, the European Commission accepted a Microsoft remedy over Teams bundling, averting a fine of up to 10% of global revenue after Microsoft agreed to a 1-8 euro Office-with-Teams price gap and a 10-year Teams interoperability commitment, according to Reuters.
What is Microsoft Entra ID and why is it part of the investigation?
Entra ID, formerly Azure Active Directory, is Microsoft’s identity and access management platform. Regulators are examining whether its pricing and integration with Microsoft’s cloud and security products make it harder for customers to move identity management to a rival cloud provider.
Could the FTC block or break up Microsoft’s cloud business?
That outcome looks unlikely based on precedent. Both the European CISPE settlements and the FTC’s own recent history suggest licensing and interoperability remedies, not structural breakups, are the realistic outcome if the investigation results in any action at all.
How did Microsoft stock react to the FTC investigation news?
Shares fell just 0.6% in after-hours trading after Bloomberg first reported the FTC’s escalated scrutiny in February 2026, a muted reaction that reflects investors having already watched the FTC’s Activision Blizzard case get dropped in 2025.
What is Microsoft’s current share of the cloud computing market?
Microsoft Azure held 21% of the global cloud infrastructure market in the first quarter of 2026, behind Amazon Web Services at 28% and ahead of Google Cloud at 14%, according to Synergy Research Group.
Are AWS and Google Cloud involved in the FTC investigation?
They are reportedly among the rivals the FTC contacted for information in February 2026, though neither company has been named directly in public reporting and neither has issued an on-the-record statement about the probe.
