Japan Fair Trade Commission carried out an inspection at Microsoft Japan as part of a competition investigation into its cloud operations, Nikkei reported Wednesday, citing people familiar with the matter.

The watchdog is assessing whether the company's business terms around its Azure platform disadvantaged rival cloud providers, potentially breaching Japan's antimonopoly rules. It is also expected to gather information from U.S.-based parent Microsoft, according to the report.

The inquiry centers on whether Microsoft's Japanese arm used its position in widely adopted products such as Windows Server and Microsoft 365 to encourage customers to favor Azure over competing infrastructure services. Azure competes with Amazon Web Services and Google Cloud in the global cloud market, the report said.

Authorities are examining whether contractual conditions or pricing structures made it harder or more costly for customers to deploy Microsoft software on non-Azure platforms, according to the report.

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