Japan’s competition watchdog has conducted an on-site inspection at Microsoft’s local offices as part of a formal inquiry into the company’s cloud business practices. The move forms part of an investigation into whether Microsoft may have restricted customers using its Azure platform from freely operating across rival cloud services.

The Japan Fair Trade Commission is examining potential breaches of the country’s Antimonopoly Act, focusing on whether Microsoft engaged in unfair trade practices. Officials are also expected to seek explanations from Microsoft’s headquarters in the United States as the probe develops.

In a brief statement, Microsoft Japan said it intends to cooperate fully with the authorities’ requests.

Azure competes globally with Amazon Web Services and Google Cloud in a rapidly expanding cloud infrastructure market. Regulators are increasingly scrutinising how major technology firms structure contracts and licensing agreements as cloud computing becomes central to enterprise operations.

According to individuals familiar with the investigation, authorities are reviewing whether Microsoft introduced terms that either limited the ability to run its software on non-Azure platforms or resulted in higher costs for customers choosing alternative providers. Particular attention is being paid to licensing arrangements involving Windows Server and Microsoft 365, both of which are widely used in corporate environments.

Sources suggest regulators are assessing whether Microsoft used its dominant position in operating systems and productivity software to encourage clients in Japan to remain within the Azure ecosystem. Changes introduced in 2019 reportedly categorised certain rival platforms, including AWS and Google Cloud, as Listed Providers. That designation placed restrictions on how Microsoft software could be deployed on those competing services.

Under Japanese competition law, companies holding strong market positions are prohibited from imposing restrictive conditions that limit customers’ dealings with competitors. The Fair Trade Commission appears to be evaluating whether Microsoft’s contractual frameworks effectively discouraged multi-cloud strategies or increased operational costs for businesses seeking flexibility.

The scrutiny in Japan reflects a broader international trend. Regulators in other regions have expressed concerns about how licensing structures may influence competition within the cloud sector. In 2025, the United Kingdom’s Competition and Markets Authority indicated in a market report that certain changes to Azure’s licensing terms could reduce competitive balance. Meanwhile, the European Commission has initiated a market review to determine whether major cloud providers such as Azure and AWS should face additional obligations under the Digital Markets Act.

As demand for cloud services continues to grow, authorities worldwide are paying closer attention to the practices of dominant suppliers. The outcome of the Japanese investigation could have implications for how global technology firms structure software licensing and cloud partnerships in the future.