Microsoft could face an EU investigation into whether its security software practices prohibit customers from accessing rival products, marking the tech giant's latest standoff with regulators.
Entra ID management software, which allows companies to control who can log in to cloud-based platforms, will be the focus of a series of questions from EU regulators seeking to understand whether Microsoft customers can use rival software.
“The Commission has received several complaints about Microsoft, including in relation to its Azure product, which we are assessing according to our standard procedures,” an EU spokesperson said. Reuters last week.
The launch of the investigation comes amid a period of intense regulatory scrutiny for Microsoft, with several other ongoing investigations putting it in a precarious position.
However, as is the case with this latest investigation, most current regulatory inquisitions are only in their initial stages and not at the point where Microsoft could incur a fine or penalty.
Alex Haffner, a partner at UK-based law firm Fladgate, said ITPro That while the investigation is still in its infancy, regulators could decide to conduct a deeper exploration of the company's practices.
“In this case, the EU Commission has not yet opened any formal investigation,” he said. “It is reportedly in the stage of evaluating whether complaints about practices related to security software have any basic merit before deciding what steps to take, if any.”
However, the situation marks another case of imminent regulatory scrutiny for Microsoft. Its investments in AI, for example, have been a key talking point for EU lawmakers in recent months.
Having invested around $13 billion in OpenAI so far, Microsoft became the center of EU suspicions when the Commission began investigating whether its relationship with the company “could be reviewable under merger regulation.” of the EU”.
In this case, regulators in the United Kingdom and the United States have also launched preliminary investigations.
Regulatory concerns have also been raised over its recent investment in French generative AI startup Mistral AI. Union lawmakers confirmed plans for a preliminary inquiry into the deal, amid concerns it could also breach merger legislation.
Microsoft said its investment in the Paris-based company will be converted to equity in an upcoming funding round.
Haffner suggested that Entra's current interest may prompt similar actions by counterparts elsewhere in Europe and across the Atlantic.
“It is also likely that it is not just EU authorities who will want to delve deeper into the matter, but their counterparts in the UK and US in particular are likely to take a close interest, if not considering opening their own investigations.” “Haffner said. saying.
Microsoft in the crosshairs
In addition to AI-related scrutiny, Microsoft has faced repeated criticism for its practices in the cloud computing space.
A European cloud infrastructure group, CISPE, filed a competition complaint against the company in November 2022. A period of investigation by the Directorate-General for Competition followed, although, surprisingly, the most recent development came from the company itself. Microsoft.
The company is attempting to remedy the situation by engaging in discussions with the trade group, marking a proactive measure to mitigate bad press.
Before this, Microsoft announced that it would separate Teams from its Microsoft 365 and Office 365 productivity software suites in a similar attempt to avoid increasing EU scrutiny.
However, tensions remain high, with Google Cloud VP Amit Zavery publicly criticized Microsoft's bullish cloud tactics. and tries to create a “walled garden” from its cloud services.
Groundhog Day for Microsoft
Microsoft is no stranger to regulatory scrutiny, according to Haffner, and has frequently clashed with lawmakers over the past 25 years over its business practices.
In the late 1990s and early 2000s, the company suffered a similar level of criticism over Windows.
“In many ways, you may be experiencing a bit of a Groundhog Day feeling,” Haffner said.
“The current situation closely reflects the position Microsoft found itself in the 1990s and early 2000s, when it faced numerous investigations and legal battles with competition regulators over the company's stranglehold on customers through its ubiquitous Windows operating system,” he added.
