US goes all in with antitrust trial against Big Tech choirboy Microsoft
After a year-long investigation, the Federal Trade Commission has brought proceedings against the last great American monopolist...
Welcome to some huge breaking news…
Microsoft’s Satya Nadella probably found himself reflecting on Wordsworth’s most famous poem this morning…
I wandered lonely as a cloud
That floats on high o'er vales and hills,
When all at once I saw a crowd…
Mmm hmmm. That’ll be the FTC lawyers, because today US antitrust slugger Lina Khan added Microsoft to the tech titans she’s suing for being illegal monopolists.
Microsoft makes it a full house, adding to Google, Meta, Apple and Amazon.
All are now facing actions designed to re-engineer the power, structure, and monetisation of the digital economy and AI to be more competitive.
Notably absent until now has been Microsoft, though I’ve been reporting for a year how its incautious views on AI have been making regulators more and more twitchy.
And dumbass comments like this from Microsoft AI chief Mustafa Suleyman simply shorten the fuse. Remember this? 🙊
“With respect to content that’s on the open web, the social contract since the 90s has been that it’s fair use,” he said.
“Anyone can copy it, recreate with it, reproduce with it. It’s been freeware if you like. That’s been the understanding.”
Ummm, no Mustafa, that’s not right.
And today the hammer dropped. Khan snapped, and proceedings were launched.
Man, I’d just love to be a fly on the wall of Nadella’s 1:1 with Suleyman tomorrow morning. I reckon it’ll be pretty fruity 🤬
Before we get into the details, please join me in welcoming this morning’s new subs from Danish digital marketer Concept X, media measurement leader Mediaprobe in Maia in Portugal, the International News Media Association in Delhi India, MediaCat magazine in London, Radioinfo in Sydney, the IAB, Australian broadcaster Southern Cross Austereo, among others.
And thanks to this week’s sponsor, branded content specialists Avid, who help make all this happen.
Now back to the scoop…
Bloomberg’s gun antitrust reporter Leah Nylen broke the story.
The FTC is “drilling into the company’s cloud computing and software licensing businesses, cybersecurity offerings and artificial intelligence products”, she wrote.
In the past few weeks, Microsoft has been served hundreds of pages of demands for documents, business dealings, and financials.
An army of antitrust lawyers has also begun turning up at the other Big Tech firms to “gather more information” on its rival.
This is a signature move in the FTC’s incredibly efficient strategy of setting the Big Tech titans against each other.
While details are scant, and this is a breaking story, Nylen reports: “A key focus is Microsoft’s bundling of its office and security software with its cloud offerings.”
In July, a faulty software update by CrowdStrike crashed 8.5 million Microsoft Windows systems worldwide in one of the largest IT outages in history.
It led to widespread disruption across airlines, banks, hospitals and emergency services, costing corporations an estimated $10 billion.
Months earlier, the FTC had highlighted concerns that the concentrated nature of the cloud market “could have a cascading impact on the economy”.
That outage confirmed Microsoft’s control over the global technical infrastructure, and acted as a trigger.
The decision not to pull Microsoft into the tech antitrust dragnet has raised eyebrows for years, as the company has thrust ever-harder into AI to defend its lead.
It’s invested heavily in rival companies, buying Mustafa’s AI rocketship Inflection for $4 billion and poaching its key staff.
It’s also consistently closed the gap on Amazon AWS’ long-held lead in cloud.
Many - me included - have marvelled at how CEO Satya Nadella has grown the company to more than $3 trillion in valuation, while skirting monopoly allegations.
He’s subtly nudged his rivals into the abyss and stayed high and dry. Until now.
A great investigation by ComputerWorld last month plotted how Microsoft had played it careful to maintain its image as Big’s Tech’s choirboy.
It recounts how Microsoft was antitrusted once before, in 1998, when the DOJ sued it for using its Windows monopoly to kill competition.
Microsoft lost and faced being broken up - just like Google today - but it escaped after a little-known lawyer agreed it would allow non-Microsoft browsers on Windows.
That lawyer Brad Smith, is now chairman of Microsoft and has been trying his hardest to avoid being dragged back into court again.
He revealed his antitrust experiences and how to handle it here. It’s worth reading this again today.
ComputerWorld reported Microsoft’s penalty back then “was little more than a slap on the wrist” but it had a massive impact.
“The company went into a tailspin because it was so focused on defending itself rather than aggressively going after the mobile market, expanding into internet search, focusing on social media, or jumping into online retail.”
That freed space for Google, Amazon, Meta, Android and more.
A few days ago, on stage in front of publishers from the Victoria Press Association, I explained why the US Government is intent on breaking up its tech giants.
It’s the same reason Microsoft was prosecuted before - because every 25 years or so - the market becomes so consolidated the best new companies have no room to emerge.
The US has to burst some blimps to clear airspace for the newbies to soar.
Microsoft and Nadella have done a stellar job in avoiding the DOJ, but it was inevitable it would end.
And like Google, and Meta, Amazon, and Apple, it will lose. They will all lose.
Because tech is moving faster than they are, and America needs a new growth engine that adapts at the speed of AI.
And as my slide says, that means the news industry needs to prepare for a new landscape, where frenemies of the past like Google must be consigned to the past.
It’s time to focus on the future. That’s what I will be writing about from now on.