The Federal Trade Commission (FTC) has launched an investigation into whether Microsoft has breached antitrust laws across several of its diverse business segments, according to two individuals familiar with the matter. This marks the latest chapter in the government’s ongoing efforts to rein in the power of major tech companies.

Recently, the FTC sent Microsoft a detailed formal request for information, focusing on its cloud computing, artificial intelligence (AI), and cybersecurity offerings. Of particular interest to the agency is how Microsoft bundles its cloud services with its office and security products, as well as its expanding influence in the AI sector, sources revealed.

This bold move by the FTC comes at a time when its chair, Lina Khan, is nearing the end of her tenure, with less than two months remaining in the Biden administration. Khan, 35, has steered the agency towards actively regulating large corporations, particularly in response to the rapid changes in the tech industry.

Khan is expected to depart as part of the leadership transition to President-elect Donald Trump’s administration, which may shift the focus of tech regulations in the future.

The investigation into Microsoft is part of the broader scrutiny by the Biden administration on how major tech firms impact the way people access information, communicate, and shop online. The FTC has already sued Amazon and Meta for alleged anti-competitive behavior, and the Department of Justice has taken legal action against Google and Apple for their market dominance in advertising and device ecosystems, respectively.

Microsoft, one of the world’s most valuable companies, with a business portfolio ranging from its Windows operating system to LinkedIn and Xbox, had largely avoided the intense scrutiny faced by other tech giants in recent years. However, during the late 1990s, the government sought to break up Microsoft over its monopolistic control of the operating system market and its tactics to hinder competitors. Although a judge initially ruled for a breakup, an appeals court overturned the decision.

It remains uncertain whether the incoming Trump administration will continue to pursue such aggressive regulatory actions against tech companies. Under his first term, the Justice Department initiated one of the ongoing antitrust cases against Google, while the FTC filed its lawsuit against Meta.

Both Microsoft and the FTC declined to comment on the ongoing investigation, which was first reported by Bloomberg News and The Financial Times.

Founded in 1975, Microsoft is now valued at over $3 trillion. In recent years, the company has significantly expanded beyond its origins in personal computer software. Notable moves include its $69 billion acquisition of Activision Blizzard in 2023, which the FTC failed to block.

Microsoft’s Azure cloud computing platform, which rents computing power and services to businesses, has become a cornerstone of its operations. Additionally, Microsoft is the largest investor in the AI startup OpenAI and has collaborated with the company to offer access to OpenAI’s systems through Azure.

The company has also faced scrutiny over several high-profile system failures that highlight its central role in global internet infrastructure. In July, an update from cybersecurity firm CrowdStrike led to widespread crashes of computers running Microsoft’s Windows OS, disrupting travel and emergency services. Additionally, Chinese hackers reportedly accessed sensitive government emails through Microsoft’s cloud security.

As part of the FTC investigation, the agency is examining how Microsoft manages software licenses in the cloud, sources said.

Earlier, the agency received a complaint from NetChoice, an industry group representing competitors like Google and Amazon, which accused Microsoft of locking customers into its cloud services by altering terms for software such as Office. The group claimed that if customers wanted to use a different cloud provider, they would have to purchase additional software licenses, effectively penalizing them.

Microsoft has long faced criticism for its bundling practices, which some argue stifle competition. In 2023, the European Union concluded that Microsoft violated antitrust laws by bundling its Teams communication tool with Office products like Word and Excel.

The FTC is also examining Microsoft’s involvement in AI, with a focus on its partnerships and investments, including its collaboration with OpenAI, the creator of the ChatGPT chatbot. Microsoft has integrated AI into many of its products, such as its Bing search engine.

AI is currently under heavy regulatory scrutiny, with the FTC and the Justice Department dividing responsibilities for overseeing the sector. The FTC has jurisdiction over Microsoft and OpenAI, while the Justice Department is focused on Nvidia, a leading chipmaker for generative AI applications.

Earlier in 2024, the FTC launched a wide-ranging inquiry into the strategic partnerships between tech giants and AI startups, including Microsoft’s relationship with OpenAI. This partnership has raised concerns about whether it was structured to avoid regulatory oversight.

Some industry observers in Silicon Valley believe that these regulatory efforts may be too late to keep AI innovation competitive.

“As usual, regulators are experts at shutting the barn door after the horses have bolted,” said Venky Ganesan, a partner at Menlo Ventures, which invests in a variety of startups, including those in AI.