Whoops: White House Microsoft Cybersecurity Partnership Gave Company An Illegal De Facto Monopoly On Government Services

Look: I think it was nice for a change that the Biden administration at least paid some passing but inconsistent lip service to antitrust reform. It was a lovely change of pace from decades of feckless careerists who pay empty lip service to market innovation while rubber stamping mindless consolidation at every turn. And a lot of the work, like advocating for right to repair reform, made a difference.

But, and this will probably all seem quaint in context of the mindlessly pro-consolidation corporate coddling coming under Trump 2.0, there were still ample instances where the Biden White House was caught talking out of both sides of their mouth when it comes to monopoly power.

Like the Biden FCC, for example, which repeatedly pushed decorative policies tackling the symptoms of telecom monopoly power, but had a bizarre aversion to even acknowledging the threat or harm of monopoly power and muted competition in public-facing statements.

Or this new report from ProPublica, for example, that found that a major 2021 partnership between the Biden White House and Microsoft, which involved Microsoft pledging $150 million in technical services to help the U.S. government upgrade its digital security, wound up giving the company a de facto illegal monopoly over government security services.

The original pledge made by CEO Satya Nadella, was supposed to prop up an Executive Order that modernized the Federal Government cybersecurity defenses. It involved Microsoft seeding its consultants across the federal government to install the company’s cybersecurity products free of charge for a limited time.

It helped repair Microsoft’s image after some of its own security lapses caused several high profile security scandals. It gave the White House a lot of breezy press about how it was taking cybersecurity seriously.

But as ProPublica notes, once the free period expired, the government was locked into using Microsoft’s products (and inevitably soaring subscription fees) for the foreseeable future. It also found itself paying more and more money for Microsoft cloud services to prop up the now locked-in use of those services. The whole thing, ProPublica notes, actively courted monopoly and was arguably illegal:

“But while Microsoft’s gambit paid off handsomely for the company, legal experts told ProPublica the White House Offer deals never should have come to pass, as they sidestep or even possibly violate federal laws that regulate government procurement. Such laws generally bar gifts from contractors and require open competition for federal business.

Accepting free product upgrades and consulting services collectively worth hundreds of millions of dollars is “not like a free sample at Costco, where I can take a sample, say, ‘Thanks for the snack,’ and go on my merry way,” said Eve Lyon, an attorney who worked for four decades as a procurement specialist in the federal government. “Here, you have changed the IT culture, and it would cost a lot of money to go to another system.”

If you have a moment, please read the whole thing. And note that the FTC is purportedly preparing to launch an investigation into Microsoft’s anticompetitive behavior as it pertains to cloud computing and Azure (though I suspect it won’t survive Trumpism, unless Trump needs leverage to bully Microsoft into coddling white supremacists or something).

Senator Ron Wyden warned about some of this. For all of the Biden government’s talk about monopoly power, government still has been broadly conditioned over decades to look the other way when it comes to monopoly harms to competition. That kind of rot takes far more than a few strategically chosen high profile antitrust lawsuits to address, it takes widespread, dedicated reform and an entirely new way of thinking.

The Biden administration at least tried, on occasion, to take aim at monopoly power. Though again it tended to focus on some high profile cases that it still managed to miss the mark on. There’s no limit of highly consolidated industries dominated by politically potent monopoly power the government routinely and comically turns a blind eye to (oh hi there telecom industry, didn’t see you standing there).

Now again, this is all going to seem downright adorable in the context of the unbridled corruption, monopoly coddling, mindless deregulation and rubber stamping of terrible mergers that’s coming under a second Trump term. But it still demonstrates that monopoly busting and antitrust reform, should this country ever choose to actually embrace it, needs to be consistent and more than decorative.