Japan’s Fair Trade Commission on Wednesday raided the Tokyo offices of Microsoft Japan as part of an investigation into whether the US technology group improperly restricted customers of its Azure cloud platform from using rival services, raising fresh scrutiny of its licensing practices in the world’s third-largest economy.

A source with direct knowledge of the matter told Reuters that the watchdog suspects a potential breach of Japan’s Antimonopoly Act relating to unfair trade practices. The person said the regulator is examining whether Microsoft Japan set conditions that effectively prevented customers from running its software on competing cloud platforms or imposed higher fees for doing so.

The source told Reuters that Japan’s antitrust authorities will also seek clarification from Microsoft’s US parent company as part of the probe. The Japan Fair Trade Commission declined to comment, while Microsoft Japan did not immediately respond to a request for comment.

According to sources cited by Nikkei, investigators are focusing on whether Microsoft used its strength in products such as Windows Server and Microsoft 365 to steer customers towards Azure. The sources said licensing terms may have limited access to popular services on rival clouds or made their use uneconomical.

Azure competes globally with Amazon Web Services and Google Cloud for corporate and public sector contracts. Japan’s competition authority has in recent years intensified its oversight of large technology platforms, conducting on-site inspections and issuing corrective orders in digital markets.

Regulators in Britain, the European Union and the United States have separately examined Microsoft’s cloud practices, while Brazil’s antitrust authority last month opened an administrative investigation into the company’s local unit over cloud services.

The on-site inspection marks an escalation in Japan’s scrutiny of cloud computing contracts, a fast-growing sector central to corporate IT infrastructure, and could lead to formal orders or other remedies if violations are established.

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