President Donald Trump has ushered in a new era of deregulation and commitment to free-market capitalism that promises to bolster the nation’s economic outlook. In doing so, it is crucial that the administration prioritize the central pillar of healthy market economies—fair competition—by preventing corporate behemoths from wielding outsized control over entire industries. Perhaps no sector needs greater scrutiny than the burgeoning AI space, where Microsoft already has a massive foothold. As Elon Musk and other tech titans have now pointed out, Microsoft must be reined in to prevent the company from using anticompetitive tactics to dominate this new technology.
Late last year, Elon Musk added Microsoft as a defendant in his antitrust lawsuit against OpenAI, the company responsible for ChatGPT. Microsoft is closely tied to OpenAI, having poured $13 billion into the fledgling startup. Musk alleges this investment spurred the company’s transformation from a high-minded nonprofit to a profit-driven enterprise. Now, President Trump has announced the new Stargate initiative to develop AI technology in the United States, with OpenAI as a major beneficiary. It is imperative, therefore, that we take these accusations against Microsoft seriously.
Microsoft has used its substantial stake in OpenAI to try and stamp out competition in the space. For example, Microsoft has allegedly prohibited investors in OpenAI from investing in rivals, such as Musk’s xAI. Musk also alleges that the close ties between the two companies has led to the exchange of “competitively sensitive information.” Since the two companies have shared board members in common, it’s easy to see where Musk is coming from. Even if Microsoft does not own OpenAI outright, it’s substantial investment and involvement in the company has given Microsoft considerable sway over what is arguably the world’s most important AI company.
These anticompetitive practices by Microsoft are nothing new. Microsoft customers have already seen how the corporation throws its weight around. For example, the company’s restrictive licensing agreements have reportedly prevented users from exporting their data from Microsoft’s Azure cloud service to other cloud providers. They further lock users in by charging onerous exit fees for service cancellation and making Office 365 products incompatible with rival services. The European Union has also called out Microsoft for bundling its Teams office communication platform with its other business apps.
More alarming still, Microsoft has recently received criticism over its acquiescence to the Chinese government, which has led to cybersecurity concerns. The company’s push into the Chinese market has meant it must comply with the country’s National Cybersecurity Law, which demands foreign software companies hand over source code, encryption keys, and backdoor access to their ever-growing suite of software products. All of this is alarming enough in its own right, but far more disturbing given the company’s domination over AI technology.
With a new administration in the Oval Office, it is yet to be seen whether the Federal Trade Commission will continue its tough scrutiny of Microsoft. As Andrew Ferguson takes over the FTC from renowned trust-buster Lina Khan, it is crucial that the Commission keep the pressure on Microsoft and force this industry giant to play by the rules. President Trump’s Stargate initiative is an ambitious display of American enterprise, but it will be impeded if massive players like Microsoft are able to commandeer the market. As always, free and fair competition is a prerequisite for truly exceptional innovation and must be protected.