Microsoft (MSFT) could be in trouble as the U.S. Federal Trade Commission is reportedly preparing to commence a probe into antitrust practices at the tech giant’s cloud unit. The news comes as the U.S. regulator continues to tighten the noose around Big Tech to address concerns about their monopolistic tactics.
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More on FTC’s Probe into Microsoft’s Cloud Computing Unit
According to the Financial Times, the FTC is investigating allegations that Microsoft is abusing its market dominance in the productivity software space by enforcing licensing terms that prevent customers from moving their data from its Azure cloud service to rivals’ platforms.
The FTC has yet to formally urge Microsoft for documents and other information as part of its probe. Among the practices being examined, the FTC is looking into notable hikes in subscription fees for clients who leave MSFT’s cloud platform and steep exit fees. The regulator will also investigate accusations that the company is making its Office 365 products incompatible with rival cloud platforms.
Big Tech Under Scrutiny
Big Tech like Microsoft, Meta Platforms (META), Amazon (AMZN), and Google’s parent Alphabet (GOOGL) have been facing increased scrutiny in recent years not only in the U.S., but also in the European Union (EU) and other regions. In the U.S., several tech companies have opposed the aggressive stance of the youngest-ever FTC chair Lina Khan.
However, with Donald Trump winning the U.S. presidential elections, tech giants are hopeful of less regulation to bolster the competitiveness of American companies.
Regulators are mainly pointing out unfair practices by Big Tech to thwart competition from smaller players and policies that prevent customers from shifting to rival products. It is worth noting that in July 2024, Microsoft averted the EU’s antitrust probe into its cloud business by clinching a deal under which the company agreed to make changes to some of its software licensing practices.
Is Microsoft a Buy or Sell?
Despite regulatory pressures, Microsoft scores a Strong Buy consensus rating based on 26 Buys and three Holds. Analysts are particularly upbeat about the prospects of the company’s cloud business and generative AI (artificial intelligence) opportunities.
The average MSFT stock price target of $495.33 implies 16% upside potential from current levels. Shares have advanced 13.5% so far this year.
