Japan’s Fair Trade Commission (JFTC) has launched an investigation into Microsoft’s cloud licensing practices, scrutinizing whether the company is unfairly limiting customers’ ability to utilize rival cloud platforms like Amazon Web Services (AWS) and Google Cloud. The probe, which included a raid on Microsoft’s Japanese offices on , centers on allegations that Microsoft is leveraging contractual and licensing arrangements to favor its own Azure cloud service.
According to reports from Japanese news outlet Nikkei, the JFTC is examining claims that Microsoft is making it economically disadvantageous for customers to run Microsoft software – including Windows and Microsoft 365 – on infrastructure other than Azure. This echoes concerns raised in other regions, including the UK, Europe, and the USA, where similar practices have drawn regulatory scrutiny.
Microsoft has stated it is “fully cooperating” with the JFTC’s investigation. The core of the issue revolves around Microsoft’s licensing model, which reportedly offers significant discounts for its software when deployed on Azure, while imposing higher costs for running the same software on competing cloud services. This tiered pricing structure has prompted accusations of anti-competitive behavior, effectively steering customers towards Microsoft’s own cloud platform.
The JFTC’s action signals a growing willingness to address antitrust concerns in Japan’s rapidly evolving digital economy. The agency has been increasingly active in enforcing competition laws in digital markets since , moving beyond initial investigations and commitments to more assertive enforcement measures. This includes the power to conduct on-site inspections – often referred to as “dawn raids” – issue document production orders, and impose cease-and-desist directives and financial penalties.
Japan’s recent enforcement actions aren’t limited to Microsoft. The JFTC has also taken steps to address perceived monopolistic practices by Apple and Google, requiring them to open their app stores to third-party developers and challenging Google’s control over Android handset manufacturers. The agency also expressed concerns regarding the use of copyrighted material in OpenAI’s Sora video generation technology.
The current investigation into Microsoft builds on a pattern of regulatory pressure globally. In Europe, Microsoft made changes to its cloud licensing terms, but these adjustments were deemed insufficient by Google, which continues to push for further modifications. The situation remains unresolved in both the UK and the USA, with the outcome dependent on ongoing regulatory reviews and Microsoft’s responses.
Microsoft’s substantial presence in Japan – providing operating systems, server products, productivity suites, and its Azure cloud platform to a wide range of organizations – underscores the potential impact of the JFTC’s investigation. The outcome could have significant implications for how Microsoft structures its cloud offerings and competes in the Japanese market, and potentially set a precedent for other regions grappling with similar concerns about cloud vendor lock-in and anti-competitive practices.
The JFTC’s approach is also notable for its public image. The agency employs a mascot named “Dokkin,” and reportedly uses a “Dokkin Scope” to identify violations of the Antimonopoly Act, with Dokkin’s heart lighting up upon successful detection of such violations. This playful approach contrasts with the serious nature of the antitrust enforcement work being undertaken.
This investigation is part of a broader trend of increased regulatory scrutiny of Big Tech companies worldwide, as governments seek to ensure fair competition and prevent the abuse of market power in the digital age. The JFTC’s actions demonstrate Japan’s commitment to actively participating in this global effort.
