The Japan Fair Trade Commission (JFTC) conducted an on-site inspection of Microsoft Japan’s Tokyo headquarters on Wednesday, February 25, 2026, according to Nikkei. The raid is part of a formal investigation into suspected violations of Japan’s Antimonopoly Act, specifically regarding “trade obstruction” and “conditional transactions” within the cloud computing market.
Restrictive Licensing and Tying
The JFTC is investigating whether Microsoft has leveraged its dominant software position to unfairly steer enterprise customers toward its Azure cloud platform while hindering competitors such as Amazon Web Services (AWS) and Google Cloud.
According to sources familiar with the matter, the probe focuses on several key allegations:
- Interference with Competition: Microsoft is suspected of prohibiting or unfairly discouraging the use of its essential software on rival cloud services.
- “Vendor Lock-in” Tactics: Microsoft may have set restrictive contract terms that make key products difficult or technically uneconomical to run on non-Azure platforms.
- Discriminatory Pricing: Microsoft imposed significantly higher licensing fees for customers who chose to use rival cloud infrastructure for Microsoft-integrated workloads.
Japan’s Growing Cloud Economy
The investigation comes as competition for Japan’s cloud sector intensifies. The market is projected to reach ¥19 trillion (approximately $126 billion) by 2029, driven largely by corporate demand for generative AI and digital transformation. Regulators are concerned that “tough conditions” for software use could hamper rivals’ ability to acquire customers and drive up long-term costs for Japanese enterprises.
Next Steps and Regulatory Response
The JFTC’s move aligns with a global trend; authorities in the United Kingdom, European Union, and Brazil have all recently initiated similar reviews into cloud software licensing.
A spokesperson for Microsoft Japan stated that the company is “fully cooperating with the JFTC in their requests”. Following the raid, the commission is expected to analyze digital evidence and clarify exchanges between Microsoft Japan and its U.S. parent company to determine if formal administrative orders or financial penalties are necessary.