The Federal Trade Commission is preparing to launch an investigation into anti-competitive practices at Microsoft's cloud computing business, as the US regulator continues to pursue Big Tech in the final weeks of Joe Biden's presidency.

The FTC is examining allegations that Microsoft is 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 competitors' platforms, according to people with direct knowledge of the matter.

Tactics being examined include substantially increasing subscription fees for those that leave, charging steep exit fees and allegedly making its Office 365 products incompatible with rival clouds, they added.

The FTC is yet to formally request documents or other information from Microsoft as part of the inquiry, the people said.

A move to challenge Microsoft's cloud business practices would mark the latest broadside against Big Tech by the FTC's chair Lina Khan, who has centred her tenure on aggressively curbing the monopolistic powers of the likes of Meta and Amazon.

Khan, who has become the public enemy for most of Wall Street's dealmaking community, is set to be replaced after president-elect Donald Trump enters the White House next year.

While any successor to Khan may not adopt as tough a stance, potential contenders are expected to continue targeting Big Tech companies which have attracted bipartisan ire in Washington. The Republican party has accused online platforms of allegedly censoring conservative voices.

The decision to launch a formal probe would come after the FTC sought feedback from industry participants and the public on cloud computing providers' business practices. The results in November last year revealed that most responses raised concerns around competition, the agency said at the time, including software licensing practices that curb the ability to use some software in other cloud providers' ecosystems.