Following Alphabet Inc. Class C, Microsoft Corporation (MSFT.US) also faces 'knocking' from Japanese antitrust storm, tech giants cloud businesses facing compliance test.

According to an informed source, Japan's antitrust regulatory agency, the Japan Fair Trade Commission (JFTC), conducted a surprise inspection at the Japan headquarters of Microsoft Corporation (MSFT.US) on February 25th. The core of this action is to investigate whether Microsoft Corporation has been using its dominant position in the operating system and office software market to improperly promote its Azure cloud platform and restrict competitors. Regulatory authorities suspect that Microsoft Corporation, by setting unfair licensing terms, is causing customers to face higher costs or more complex technical barriers when running Windows Server or Microsoft 365 software on third-party platforms such as Amazon.com, Inc. AWS or Alphabet Inc. Class C cloud, compared to Azure. A spokesperson for the Japan Fair Trade Commission declined to comment. A representative of Microsoft Corporation Japan stated in a statement that the company is fully cooperating with the requirements of the Fair Trade Commission. In fact, the Japan Fair Trade Commission's intervention this time is not random but a proactive response to the global trend of regulating "vendor lock-in" behavior by large tech giants. It is understood that Microsoft Corporation is engaged in fierce global competition with Amazon.com, Inc.'s AWS and Alphabet Inc.'s Alphabet Inc. Class C cloud for cloud service and artificial intelligence clients. These three major U.S. cloud service providers all see Japan as a key market - Japan has a large number of conglomerates and banks - and have invested heavily to ensure a leading position in this market. Regulators are concerned that if Microsoft Corporation uses its software licensing advantage to indirectly force users to bind Azure services, it will seriously undermine the freedom of competition in the cloud market and increase the long-term costs of enterprise digital transformation. Therefore, the Japanese antitrust regulatory agency is taking increasingly tough measures to curb what it perceives as the growing monopolistic trend of expansion by large U.S. tech companies, coordinating its stance with overseas regulatory agencies. With the European Union and the United States having previously conducted in-depth reviews of similar bundling behaviors, Japan's high-profile intervention this time signifies a strengthening consensus among major global economies for fair access to cloud infrastructure. It is worth mentioning that last year, the Japan Fair Trade Commission issued a cease-and-desist order to Alphabet Inc. Class C, pointing out that the Android software provider had instructed business partners to prioritize the promotion of its smartphone applications, allegedly abusing its market dominance. With the rapid development of generative artificial intelligence, the cloud services market is expected to accelerate its expansion - a technology that heavily relies on the support of high-performance server clusters. While Japan has domestic data center operators (the government is working to strengthen the national cybersecurity system by supporting these companies), like most countries globally, its domestic cloud services market is firmly dominated by U.S. suppliers. Research firm IDC predicts that by 2029, the size of the Japanese cloud computing market will reach 19 trillion yen (approximately 121 billion U.S. dollars), nearly twice the total for 2024. Meanwhile, the Japan Fair Trade Commission has clearly stated its hope to ensure a fair and orderly market competition environment during a critical window period of increasing market demand.