The U.S. Federal Trade Commission has opened a broad antitrust investigation into Microsoft, including of its software licensing and cloud computing businesses, a source familiar with the matter said on Wednesday.

The probe was approved by FTC Chair Lina Khan ahead of her likely departure in January. The election of Donald Trump as U.S. president, and the expectation he will appoint a fellow Republican with a softer approach toward business, leaves the outcome of the investigation up in the air.

The FTC is examining allegations the software giant is potentially abusing its market power in productivity software by imposing punitive licensing terms to prevent customers from moving their data from its Azure cloud service to other competitive platforms, sources confirmed earlier this month.

The FTC is also looking at practices related to cybersecurity and artificial intelligence products, the source said on Wednesday.

Microsoft declined to comment on Wednesday.

Competition complains about practices

Competitors have criticized Microsoft’s practices they say keep customers locked into its cloud offering, Azure. The FTC fielded such complaints last year as it examined the cloud computing market.

NetChoice, a lobbying group that represents online companies such as Amazon and Google, which compete with Microsoft in cloud computing, criticized Microsoft’s licensing policies, and its integration of AI tools into its Office and Outlook.

“Given that Microsoft is the world’s largest software company, dominating in productivity and operating systems software, the scale and consequences of its licensing decisions are extraordinary,” the group said.

Google in September complained to the European Commission about Microsoft’s practices, saying it made customers pay a 400% mark-up to keep running Windows Server on rival cloud computing operators, and gave them later and more limited security updates.

The FTC has demanded a broad range of detailed information from Microsoft, Bloomberg reported earlier on Wednesday.

The agency had already claimed jurisdiction over probes into Microsoft and OpenAI over competition in artificial intelligence and started looking into Microsoft’s $650 million deal with AI startup Inflection AI.

Other companies faced accusations

Microsoft has been somewhat of an exception to U.S. antitrust regulators’ recent campaign against allegedly anticompetitive practices at Big Tech companies.

Facebook owner Meta Platforms, Apple and Amazon.com Inc. have all been accused by the U.S. of unlawfully maintaining monopolies.

Alphabet’s Google is facing two lawsuits, including one where a judge found it unlawfully thwarted competition among online search engines.

Microsoft CEO Satya Nadella testified at Google’s trial, saying the search giant was using exclusive deals with publishers to lock up content used to train artificial intelligence.

It is unclear whether Trump will ease up on Big Tech, whose first administration launched several Big Tech probes. JD Vance, the incoming vice president, has expressed concern about the power the companies wield over public discourse.

Still, Microsoft has benefited from Trump policies in the past.

In 2019, the Pentagon awarded it a $10 billion cloud computing contract that Amazon had widely been expected to win. Amazon later alleged that Trump exerted improper pressure on military officials to steer the contract away from its Amazon Web Services unit.
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MELBOURNE, AUSTRALIA — Australia’s House of Representatives on Wednesday passed a bill that would ban children younger than 16 years old from social media, leaving it to the Senate to finalize the world-first law.

The major parties backed the bill that would make platforms including TikTok, Facebook, Snapchat, Reddit, X and Instagram liable for fines of up to $33 million for systemic failures to prevent young children from holding accounts.

The legislation passed 102 to 13. If the bill becomes law this week, the platforms would have one year to work out how to implement the age restrictions before the penalties are enforced.

Opposition lawmaker Dan Tehan told Parliament the government had agreed to accept amendments in the Senate that would bolster privacy protections. Platforms would not be allowed to compel users to provide government-issued identity documents including passports or driver’s licenses. The platforms also could not demand digital identification through a government system.

“Will it be perfect? No. But is any law perfect? No, it’s not. But if it helps, even if it helps in just the smallest of ways, it will make a huge difference to people’s lives,” Tehan told Parliament.

Communications Minister Michelle Rowland said the Senate would debate the bill later Wednesday. The major parties’ support all but guarantees the legislation will pass in the Senate, where no party holds a majority of seats.

Lawmakers who were not aligned with either the government or the opposition were most critical of the legislation during debate on Tuesday and Wednesday.

Criticisms include that the legislation had been rushed through Parliament without adequate scrutiny, would not work, would create privacy risks for users of all ages and would take away parents’ authority to decide what’s best for their children.

Critics also argue the ban would isolate children, deprive them of positive aspects of social media, drive children to the dark web, make children too young for social media reluctant to report harms they encountered and take away incentives for platforms to make online spaces safer.

Independent lawmaker Zoe Daniel said the legislation would “make zero difference to the harms that are inherent to social media.”

“The true object of this legislation is not to make social media safe by design, but to make parents and voters feel like the government is doing something about it,” Daniel told Parliament.

“There is a reason why the government parades this legislation as world-leading, that’s because no other country wants to do it,” she added.

The platforms had asked for the vote on legislation to be delayed until at least June next year when a government-commissioned evaluation of age assurance technologies made its report on how the ban could been enforced.

Melbourne resident Wayne Holdsworth, whose 17-year-old son Mac took his own life last year after falling victim to an online sextortion scam, described the bill as “absolutely essential for the safety of our children.”

“It’s not the only thing that we need to do to protect them because education is the key, but to provide some immediate support for our children and parents to be able to manage this, it’s a great step,” the 65-year-old online safety campaigner told The Associated Press on Tuesday.

“And in my opinion, it’s the greatest time in our country’s history,” he added, referring to the pending legal reform.
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SYDNEY — Google and Facebook-owner Meta Platforms urged the Australian government on Tuesday to delay a bill that will ban most forms of social media for children under 16, saying more time was needed to assess its potential impact.

Prime Minister Anthony Albanese’s center-left government wants to pass the bill, which represents some of the toughest controls on children’s social media use imposed by any country, into law by the end of the parliamentary year on Thursday.

The bill was introduced in parliament last week and opened for submissions of opinions for only one day.

Google and Meta said in their submissions that the government should wait for the results of an age-verification trial before going ahead.

The age-verification system may include biometrics or government identification to enforce a social media age cut-off.

“In the absence of such results, neither industry nor Australians will understand the nature or scale of age assurance required by the bill, nor the impact of such measures on Australians,” Meta said.

“In its present form, the bill is inconsistent and ineffective.”

The law would force social media platforms, and not parents or children, to take reasonable steps to ensure age-verification protections are in place. Companies could be fined up to $32 million for systemic breaches.

The opposition Liberal party is expected to support the bill though some independent lawmakers have accused the government of rushing through the entire process in around a week.

A Senate committee responsible for communications legislation is scheduled to deliver a report on Tuesday.

Bytedance’s TikTok said the bill lacked clarity and that it had “significant concerns” with the government’s plan to pass the bill without detailed consultation with experts, social media platforms, mental health organizations and young people.

“Where novel policy is put forward, it’s important that legislation is drafted in a thorough and considered way, to ensure it is able to achieve its stated intention. This has not been the case with respect to this Bill,” TikTok said.

Elon Musk’s X raised concerns that the bill will negatively impact the human rights of children and young people, including their rights to freedom of expression and access to information.

The U.S. billionaire, who views himself as a champion of free speech, last week attacked the Australian government saying the bill seemed like a backdoor way to control access to the internet.
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sydney — Australia’s Indian Ocean territory of Christmas Island will be connected by subsea cable to the northern garrison city of Darwin, a project backed by Alphabet’s Google that Australia says will boost its digital resilience.

Christmas Island is 1,500 kilometers (930 miles) west of the Australian mainland, with a small population of 1,250, but strategically located in the Indian Ocean, 350 kilometers (215 miles) from Jakarta.

The cable announcement comes as the Australian and U.S. militaries upgrade airfields in Australia’s north, where a rotating force of U.S. Marines will be joined by Japanese troops next year.

Google’s vice president of global network infrastructure, Brian Quigley, said in a statement the Bosun cable will link Darwin to Christmas Island, while another subsea cable will connect Melbourne on Australia’s east coast to the west coast city of Perth, then on to Christmas Island and Singapore.

Australia is seeking to reduce its exposure to digital disruption by building more subsea cable pathways to Asia to its west, and through the South Pacific to the United States.

“These new cable systems will not only expand and strengthen the resilience of Australia’s own digital connectivity through new and diversified routes but will also complement the Government’s active work with industry and government partners to support secure, resilient and reliable connectivity across the Pacific,” Communications Minister Michelle Rowland said in a statement.

The other partners in the cable project include Australian data center company NextDC, Macquarie-backed telecommunications group Vocus, and SUBCO.

SUBCO previously built an Indian Ocean cable from Perth to Oman, with spurs to the U.S. military base of Diego Garcia, and Cocos Islands, where Australia is upgrading a runway for defense surveillance aircraft.

Although 900 kilometers (560 miles) apart, Christmas Island is seen as an Indian Ocean neighbor of Cocos Islands, which the Australian Defense Force has said is key to its maritime surveillance operations in a region where China is increasing submarine activity.

The new cables will also link to a Pacific Islands network being built by Google and jointly funded by the United States, connecting the U.S. and Australia through hubs in Fiji and French Polynesia.

Vocus said in a statement the two networks will form the world’s largest submarine cable system spanning 42,500 kilometers (26,408 miles) of fiber optic cable running between the U.S. and Asia via Australia.
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ALEXANDRIA, Virginia — The U.S. Justice Department told a federal judge that Google illegally dominated online advertising technology in seeking a second antitrust win against the company. 

The closing arguments in Alexandria cap a 15-day trial held in September in which prosecutors sought to show Google monopolized markets for publisher ad servers and advertiser ad networks and tried to dominate the market for ad exchanges, which sit between buyers and sellers. 

“Google rigged the rules of the road,” said DOJ lawyer Aaron Teitelbaum, who asked the judge to hold Google accountable for anti-competitive conduct and added that Google is “once, twice, three times a monopolist.” 

Another DOJ lawyer, Julia Tarver Wood, compared the case to the Charles Dickens novel A Tale of Two Cities and said U.S. Judge Leonie Brinkema had to decide whether to adopt the DOJ or Google version of the state of the ad market. 

Google lawyer Karen Dunn said the DOJ had not met its legal burden and was asking Brinkema to overrule key precedents. “The law simply does not support what the plaintiffs are arguing in this case,” Dunn said. 

She argued the DOJ was ignoring Google’s legitimate business decisions and the robust quality of the online advertising market. The company argues the government had cherry-picked a narrow slice of the online market and did not account for aggressive competition. 

Shares of Alphabet, the parent company of Google, were up 1.4% in afternoon trading. 

Publishers testified at the trial that they could not switch away from Google, even when it rolled out features they disliked, since there was no other way to access the huge advertising demand within Google’s ad network. 

In 2017, News Corp estimated losing at least $9 million in ad revenue that year if it had switched away, one witness said. 

If Brinkema finds that Google broke the law, she would consider prosecutors’ request to make Google at least sell off Google Ad Manager, a platform that includes the company’s publisher ad server and its ad exchange. 

Google offered to sell the ad exchange this year to end a European Union antitrust investigation, but European publishers rejected the proposal as insufficient, Reuters first reported in September. 

Analysts view the ad tech case as a smaller financial risk than the case in which a judge ruled Google maintains an illegal monopoly in online search, and in which prosecutors have argued the company must be forced to sell its Chrome browser.
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Chinese hackers are positioning themselves in U.S. critical infrastructure IT networks for a potential clash with the United States, a top American cybersecurity official said Friday.

Morgan Adamski, executive director of U.S. Cyber Command, said Chinese-linked cyber operations are aimed at gaining an advantage in case of a major conflict with the United States.

Officials have warned that China-linked hackers have compromised IT networks and taken steps to carry out disruptive attacks in the event of a conflict. Their activities include gaining access to key networks to enable potential disruptions such as manipulating heating, ventilation and air-conditioning systems in server rooms, or disrupting critical energy and water controls, U.S. officials said earlier this year.

Beijing routinely denies cyber operations targeting U.S. entities. The Chinese Embassy in Washington did not immediately respond to a request for comment.

Adamski was speaking to researchers at the Cyberwarcon security conference in Arlington, Virginia. On Thursday, U.S. Senator Mark Warner told The Washington Post a suspected China-linked hack on U.S. telecommunications firms was the worst telecom hack in U.S. history.

That cyber espionage operation, dubbed “Salt Typhoon,” has included stolen call records data, compromised communications of top officials of both major U.S. presidential campaigns before the November 5 election, and telecommunications information related to U.S. law enforcement requests, the FBI said recently.

The FBI and Cybersecurity and Infrastructure Security Agency are providing technical assistance and information to potential targets, the bureau said.

Adamski said Friday that the U.S. government has “executed globally synchronized activities, both offensively and defensively minded, that are laser-focused on degrading and disrupting PRC cyber operations worldwide.”

Public examples include exposing operations, sanctions, indictments, law enforcement actions and cybersecurity advisories, with input from multiple countries, Adamski said.
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From digital passports to apps that announce air alerts or enable conscripts to update their information in the draft register, Ukraine is now a world leader in the drive to digitalize government services. From Kyiv, Lesia Bakalets reports on how Russia’s full-scale invasion has pushed Ukraine’s drive to digitalize.
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WASHINGTON — The Federal Communications Commission voted on Thursday to propose new rules governing undersea internet cables in the face of growing security concerns, as part of a review of regulations on the links that handle nearly all the world’s online traffic.

The FCC voted 5-0 on proposed updates to address the national security concerns over the global network of more than 400 subsea cables that handle more than 98% of international internet traffic.

“With the expansion of data centers, rise of cloud computing, and increasing bandwidth demands of new large language models, these facilities are poised to grow even more critical,” FCC Chair Jessica Rosenworcel said.

Baltic nations said this week they are investigating whether the cutting of two fiber-optic undersea telecommunication cables in the Baltic Sea was sabotage.

Rosenworcel noted that in 2023 Taiwan accused two Chinese vessels of cutting the only two cables that support internet access on the Matsu Islands and Houthi attacks in the Red Sea may have been responsible for the cutting of three cables providing internet service to Europe and Asia.

“While the details of these incidents remain in dispute, what is clear is that these facilities — with locations that are openly published to prevent damage — are becoming a target,” Rosenworcel said.

The Chinese Embassy in Washington said “turning undersea cables into a political and security issue severely disrupts international market rules, threatens global digital connectivity and cybersecurity, and denies other countries, especially developing countries, the right to develop their undersea cable industry.”

The FCC is conducting its first major review since 2001 and proposing to bar foreign companies that have been denied telecommunications licenses on national security grounds from obtaining submarine cable landing licenses.

It also proposes to bar the use of equipment or services in those undersea cable facilities from companies on an FCC list of companies deemed to pose threats to U.S national security including Huawei, ZTE 000063.SZ 601728.SS, China Telecom 0728.HK and China Mobile 600941.SS.

FCC Commissioner Geoffrey Starks said the commission is considering whether to bar companies from getting undersea cable licenses that are on other lists like the Commerce Department’s Consolidated Screening List. “China has made no secret of its goal to control the market, and therefore the data that flows throughout the world,” Starks said.

Last month, a bipartisan group of eight U.S. senators called on President Joe Biden to undertake “a review of existing vulnerabilities to global undersea cable infrastructure, including the threat of sabotage by Russia and China.”

The United States has for years expressed concerns about China’s role in handling network traffic and potential for espionage.

Since 2020, U.S. regulators have been instrumental in the cancellation of four cables whose backers had wanted to link the United States with Hong Kong.

In June, the FCC advanced a proposal to boost the security of information transmitted across the internet after government agencies said a Chinese carrier misrouted traffic.
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NEW YORK — Nick Pickles, the former head of global affairs at Elon Musk’s social media platform X, is joining forces with one of Musk’s rivals, his fellow OpenAI co-founder Sam Altman.

Pickles, who resigned from X in September, told Reuters on Wednesday that he will serve as chief policy officer for Altman’s Tools for Humanity, the company building the technology to support World Network, formerly known as Worldcoin.

Pickles’ old boss, Musk, and his new boss, Altman, founded ChatGPT creator OpenAI in 2015 but have since fallen out in a messy legal dispute.

World Network, which has faced scrutiny over its data collection, is ramping up efforts to scan people’s irises, using its “orb” devices, to create World ID.

The ID will serve as a digital passport to prove, in the online realm, that its holder is an actual human being as opposed to an AI bot.

Pickles told Reuters that AI is “on the cusp” of overtaking traditional online defenses to determine whether a user is a real person, such as Captcha puzzles. Once AI can blow through those barriers, trust on the Web will further disintegrate.

“It’s imminent,” said Pickles. “Throughout my time at X and at Twitter, one of the consistent issues that kept coming up is, ‘Is this a real account or a bot?'” He added: “I saw every day how this issue is going to be central to the future of online interaction.”

During his 10 years at X, formerly known as Twitter, Pickles served most recently as the company’s top ambassador to heads of state across the globe. In that capacity, he worked closely with policymakers and regulators to shape regulatory proposals, negotiate compliance and represent the company in global forums.

He received a promotion at X in July.

One month later, billionaire Musk sued OpenAI and Altman for allegedly violating contract provisions that would have put the public good ahead of profits.

Pickles declined to comment on the litigation.

Pickles said he was optimistic about the new regulatory framework likely to be ushered in by the administration of President-elect Donald Trump.

His priority, he said, is hiring a lobbyist in Washington.
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U.S. regulators want a federal judge to break up Google to prevent the company from continuing to squash competition through its dominant search engine after a court found it had maintained an abusive monopoly over the past decade.

The proposed breakup floated in a 23-page document filed late Wednesday by the U.S. Department of Justice calls for sweeping punishments that would include a sale of Google’s industry-leading Chrome web browser and impose restrictions to prevent Android from favoring its own search engine.

A sale of Chrome “will permanently stop Google’s control of this critical search access point and allow rival search engines the ability to access the browser that for many users is a gateway to the internet,” Justice Department lawyers argued in their filing.

Although regulators stopped short of demanding Google sell Android too, they asserted the judge should make it clear the company could still be required to divest its smartphone operating system if its oversight committee continues to see evidence of misconduct.

The broad scope of the recommended penalties underscores how severely regulators operating under President Joe Biden’s administration believe Google should be punished following an August ruling by U.S. District Judge Amit Mehta that branded the company as a monopolist.

The Justice Department decision-makers who will inherit the case after President-elect Donald Trump takes office next year might not be as strident. The Washington, D.C., court hearings on Google’s punishment are scheduled to begin in April and Mehta is aiming to issue his final decision before Labor Day.

If Mehta embraces the government’s recommendations, Google would be forced to sell its 16-year-old Chrome browser within six months of the final ruling. But the company certainly would appeal any punishment, potentially prolonging a legal tussle that has dragged on for more than four years.

Besides seeking a Chrome spinoff and a corralling of the Android software, the Justice Department wants the judge to ban Google from forging multibillion-dollar deals to lock in its dominant search engine as the default option on Apple’s iPhone and other devices. It would also ban Google from favoring its own services, such as YouTube or its recently launched artificial intelligence platform, Gemini.

Regulators also want Google to license the search index data it collects from people’s queries to its rivals, giving them a better chance at competing with the tech giant. On the commercial side of its search engine, Google would be required to provide more transparency into how it sets the prices that advertisers pay to be listed near the top of some targeted search results.

Kent Walker, Google’s chief legal officer, lashed out at the Justice Department for pursuing “a radical interventionist agenda that would harm Americans and America’s global technology.” In a blog post, Walker warned the “overly broad proposal” would threaten personal privacy while undermining Google’s early leadership in artificial intelligence, “perhaps the most important innovation of our time.”

Wary of Google’s increasing use of artificial intelligence in its search results, regulators also advised Mehta to ensure websites will be able to shield their content from Google’s AI training techniques.

The measures, if they are ordered, threaten to upend a business expected to generate more than $300 billion in revenue this year.

“The playing field is not level because of Google’s conduct, and Google’s quality reflects the ill-gotten gains of an advantage illegally acquired,” the Justice Department asserted in its recommendations. “The remedy must close this gap and deprive Google of these advantages.”

It’s still possible that the Justice Department could ease off attempts to break up Google, especially if Trump takes the widely expected step of replacing Assistant Attorney General Jonathan Kanter, who was appointed by Biden to oversee the agency’s antitrust division.

Although the case targeting Google was originally filed during the final months of Trump’s first term in office, Kanter oversaw the high-profile trial that culminated in Mehta’s ruling against Google. Working in tandem with Federal Trade Commission Chair Lina Khan, Kanter took a get-tough stance against Big Tech that triggered other attempted crackdowns on industry powerhouses such as Apple and discouraged many business deals from getting done during the past four years.

Trump recently expressed concerns that a breakup might destroy Google but didn’t elaborate on alternative penalties he might have in mind. “What you can do without breaking it up is make sure it’s more fair,” Trump said last month. Matt Gaetz, the former Republican congressman that Trump nominated to be the next U.S. Attorney General, has previously called for the breakup of Big Tech companies.

Gaetz faces a tough confirmation hearing.

This latest filing gave Kanter and his team a final chance to spell out measures that they believe are needed to restore competition in search. It comes six weeks after Justice first floated the idea of a breakup in a preliminary outline of potential penalties.

But Kanter’s proposal is already raising questions about whether regulators seek to impose controls that extend beyond the issues covered in last year’s trial, and — by extension — Mehta’s ruling.

Banning the default search deals that Google now pays more than $26 billion annually to maintain was one of the main practices that troubled Mehta in his ruling.

It’s less clear whether the judge will embrace the Justice Department’s contention that Chrome needs to be spun out of Google and or Android should be completely walled off from its search engine.

“It is probably going a little beyond,” Syracuse University law professor Shubha Ghosh said of the Chrome breakup. “The remedies should match the harm, it should match the transgression. This does seem a little beyond that pale.”

Google rival DuckDuckGo, whose executives testified during last year’s trial, asserted the Justice Department is simply doing what needs to be done to rein in a brazen monopolist.

“Undoing Google’s overlapping and widespread illegal conduct over more than a decade requires more than contract restrictions: it requires a range of remedies to create enduring competition,” Kamyl Bazbaz, DuckDuckGo’s senior vice president of public affairs, said in a statement.

Trying to break up Google harks back to a similar punishment initially imposed on Microsoft a quarter century ago following another major antitrust trial that culminated in a federal judge deciding the software maker had illegally used his Windows operating system for PCs to stifle competition.

However, an appeals court overturned an order that would have broken up Microsoft, a precedent many experts believe will make Mehta reluctant to go down a similar road with the Google case. 
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