Microsoft Hooked the Government on Its Products With Freebies. Could Elon Musk’s Starlink Be Doing the Same?

A few weeks ago, my colleague Doris Burke sent me a story from the New York Times that gave us both Deja Vu.

Fragments report In the words of the Trump administration officials, the satellite internet suppliers operated by Elon Mask SpaceX, were the “donations” internet services to improve wireless connection and cell reception at the White House.

The grant surprised some of the former officials quoted in the story. But it instantly tried to us that the Trump-era made an attempt as a possible repetition of the era-values ​​we spent several months to report the business strategies last year. In Investigate thatWe concentrated on the agreement between Microsoft and Biden administration. There was something at the center of the format that most customers intuitively understood: “Free” offers usually get caught.

Microsoft began providing “free” cybercuity upgrades and consulting services to the Federal government in 2021, after President Joe Biden helps strengthen the country’s cyber defense. Our investigation revealed that it was known inside Microsoft, obviously the White House offer, the more complex, profit-driven agenda. The agency knew that the proverbial catch was that when the free examination was completed, the federal customers who accepted the offer and installed upgrades would be locked to keep them effective because switching to a contestant at that time would be expensive and complicated.

Microsoft former employees told me that the company’s offer is similar to hooking users with free sample to a drug dealer. “If we give you the crack, and you take the crack you will enjoy the crack,” said one. “And then when it comes to removing our crack, your last users will say, ‘Don’t take it away from me’ ” And you’ll be forced to give me.”

What Microsoft predicted internally has come true. When the free trials are over, the federal government’s huge swaths keep upgrades and start paying higher subscription fees, unlock billions of sales in the future for the company.

Microsoft says that all agreements with the government were “morally and federal law and regulations were followed” and during this time its only goal was to “increase the protection of the federal agencies who were constantly targeted by state-of-the-art state-state threat actors.”

However, experts in the government agreement told me that the company’s strategies were legally strict. They removed the competitive bid process, which is a basis for government collection, stops rivals outside the profitable federal business competition and suppress the innovation in the industry through expansion.

After reading the Times story about Sterlink’s grant at the White House, I checked back with those experts.

“It is not considered whether it is Microsoft or today or starlink today or any other agency last year,” said Jessica TilipmanAssociate Dean for Study for Government Procurement Law School at George Washington University Law School. “Anytime you are doing it, it’s a rear door around the contest processes that confirm that we have the best products and services from our best vendors” “

Generally, in a competitive bidding process, the government requests proposals from vendors for products and services that the government wants to buy it. These sellers then submit their proposals to the government, which theoretically chooses the best option for quality and expenditure. Giwes blocks the whole process.

Nevertheless, Commerce Secretary Howard Lutnik to say this, the Trump administration not only wants to generalize this national grant but also wants to encourage them across Washington.

Last month, during a attendance Silicon Valley Podcast “All-in“He wandered the idea of ​​a” Gratis “seller who” gives the government to the government. “The New York Times said in the episode just a few days after the release of his Starlink story that this national donor” should not overcome the entire process of being the right seller because you are giving us it. You are just giving things to the government. You are literally giving yourself. You’re not looking for anything. You’re not taking any money. “

Since the President Donald Trump took over in January, Kasturi Kasturi Kasturi as “Special Government Employees” has done a program to provide his service to provide goods to the government from the President and its agencies “Without cost to the taxpayerThe “The White House Grant was in February, he directed his company SpaceX to shipping. 4,000 terminalsWithout cost, the Federal Aviation Administration for setting up his Starlink Satellite Internet Service.

During our Microsoft investigation, the salesmen told me that the “and game” government users were converting upgraded subscriptions to pay after the free trial and eventually earned the market share for the cloud platform Azur. It is unclear what the last game is for musk and sterink. Both did not respond to the email question.

The federal law has long tried to restrict the government grants to monitor the expenditure.

At least in the nineteenth century, the executive branch staff was entering the agreement without seeking the necessary funds for the Congress, which was supposed to have the power of the purse. Law makers did not want the taxpayers to allocate the Congress that should be on the hook to spend, so they passed the anti -infancy law, one of which is effective today. A portion of “voluntary services” limits to defend the government demanding payment of the government against an supposed volunteer.

However, in 1947, the General Accounting Office (now known as the official accountability office), which gives an opinion on financial law, gives a concession: the parties will be allowed to be known as “artificial service” until the parties “in writing and in advance” will be approved.

Microsoft uses that discount to transfer the $ 150 million worth of consulting services to its government customers, entered the so -called grateful service agreement. In order to give actual cybersICuality products, the company provided “100% discount” to existing federal customers up to one year.

It is unclear whether there were artificial services agreements for the gift of musk. The White House and the FAA did not answer the written questions. SpaceX did not. An officer Told the New York Times Last month, a lawyer supervising ethics at the Council Office of the White House, examined the Starlink grant at the White House.

For the experts I consult with, the written agreements can help the organization comply with the law’s letter, but certainly not with the consciousness of it. “It does not make it right because of something technically legally legal,” said Eve LyonA attorney who worked as a procurement expert in the Federal Government for four decades.

Leon said that the consequences of taking a concession could be far -reaching, and government officials could not realize this harmfulness at the outset. “

Tilipman agrees, saying that the risk of ballooning obligation is especially pronounced when the technology and IT are eaten. Users are dependent on a supplier, causing the “lock-in” to “lock-in”, he said. It is soon to say what the donation of the Starlink will come, but Microsoft’s White House offer provides a preview of what is possible. At the beginning, the world’s largest software company is extending its footprints across the federal government while siding the competition.

Last year’s Microsoft investigation sources recently called for being caught. He told me that because the government was stuck in Microsoft, rivals stopped the federal contract opportunities. When I wanted an example, he shared a 2024 document from the Defense Information System Organization or DISA, which manages it for the Defense Department. The document describes the “exception of fair opportunities” in the collection of various new IT services, saying that $ 5.2 million order “will be issued directly to Microsoft Corporation.”

Justification? Switching to another supplier from Microsoft “Extra time, expenditure and effectiveness will be” “DISA did not answer the email emailed.