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A few weeks ago, my colleague, Doris Burke, sent me a story from The New York Times.
This article reported that Starlink, a satellite internet provider run by Elon Musk’s SpaceX, had a “donation” internet service to improve wireless connectivity and cell reception at the White House, in the words of a Trump administration official.
The donation baffled some of the former officials quoted in the story. But it quickly hit us last year as a potential repetition of the Trump era of proven business operations that took months. The study focused on deals between Microsoft and the Biden administration. At the heart of the arrangement was something most consumers understood intuitively. “Free” offers usually have a catch.
Microsoft began offering federal government’s “free” cybersecurity upgrades and consulting services in 2021 after President Joe Biden urged tech companies to help strengthen the country’s cyber defense. Our research reveals that, as is known within Microsoft, the superficially altruistic White House offers believed in a more complex, profit-driven agenda. The company knew that the proverb catch would be effectively locked to keep them, as the offer was over after the free trial period was finished for federal customers who installed the upgrade, because switching to competitors at that time would be expensive and troublesome.
A former Microsoft employee told me that the company’s offer resembles a drug dealer who connects users with free samples. “If we give you a crack and you take the crack, you will enjoy the crack,” said the person. “And when it’s time for us to remove the crack, your end users will say, ‘Don’t take it from me.’ And you will be forced to pay me. ”
What Microsoft internally predicted actually died. When the free trial ended, the vast federal strip continued to upgrade, began paying for higher subscription fees, and unlocking billions of dollars with the company’s future sales.
Microsoft said all agreements with the government are “ethically and fully in full compliance with federal law and regulations,” and that the sole goal during this period is “to strengthen the security stance of federal agencies, which are continuously targeted by sophisticated nation-state threat actors.”
However, government contract experts said the company’s operations are legally tenuous. They circumvented the competitive bidding process, which is the foundation of government procurement, thwarted rivals from the competition for profitable federal businesses, and thus suppressed industry innovation.
After reading Starlink’s Times Stories about donations to the White House, I checked in with those experts.
“We’ve seen a lot of people who have been working hard to get into,” said Jessica Tilipman, Associate Dean of Government Procurement Law Studies at George Washington University Law School. “Whenever you’re doing this, it’s the back door around the competitive process that ensures we ensure the best products and services from the best vendors.”
Typically, in the competitive bidding process, the government will seek suggestions from the vendor of the goods or services they wish to purchase. These vendors then submit proposals to the government. The government, in theory, chooses the best option in terms of quality and cost. The present avoids the entire process.
But to hear Commerce Secretary Howard Lutnick say that, the Trump administration wants not only to normalize such contributions, but also to encourage them all across Washington.
When he appeared on the Silicon Valley podcast All-In last month, he came to the concept of a “vain” vendor that “provides products to the government.” In an episode released a few days after The New York Times released the Starlink story, Lutnick said such donors “have to go through the entire process of becoming the right vendor, as you’re giving us.” Later he added: “You don’t have to sign conflict forms or all of these things because you’re not working for the government. You’re just giving the government something. You’re literally giving yourself. You’re not looking for anything. You’re not taking any money.”
The mask, which has been classified as an unpaid “special government employee” since President Donald Trump took office in January, shows that his services will be offered to the government “free to taxpayers” by the president and his businesses. The White House donation was just the latest move. In February, he instructed company SpaceX to ship 4,000 terminals to Federal Aviation Administration to ship to Federal Aviation for the installation of the Starlink Satellite Internet Service.
During a Microsoft investigation, salespeople said that explicit “endgame” within the company has converted government users to an upgraded subscription after trying them out for free, eventually gaining market share for Azure, the cloud platform. It is unclear what the final game will be for Musk and Starlink. Neither of them responded via email.
Federal law has long attempted to limit donations to the government, largely to maintain oversight of spending.
Back at least as far as the 19th century, administrative staff had signed contracts without seeking the necessary funds from the parliament, which was supposed to have the power of a wallet. Lawmakers did not want taxpayers to be in Hook because they had not been assigned Congress, so they passed the anti-success laws that still exist today. Some have restricted “voluntary services” to protect volunteers who would later request government payments.
However, in 1947, the general accounting firm (now known as the Government Accountability Office), which gave its opinions on fiscal law, gave it an exemption. Providing what has come to be known as a “free service” is permitted as long as the parties agree to “pre-written” payment exemption.
Using the exemption, Microsoft transferred a $150 million consultation service to government customers and signed a so-called free service agreement. To provide real cybersecurity products, the company has offered “100% discount” to existing federal customers for up to one year.
Microsoft’s “free” plan to upgrade government cybersecurity is designed to promote box-out and profits for competitors, insiders say
It is unclear whether a free service contract is in place for the mask prize. The White House and the FAA did not answer written questions. I didn’t even do SpaceX. Officials told the New York Times last month that an attorney overseeing ethical issues at the White House lawyer’s office reviewed Starlink’s donations to the White House.
For the experts I consulted, a written agreement may help businesses to comply with the letter of law, but certainly not in the spirit. “Just because it’s technically legal, it doesn’t make it right,” said Yves Lyon, an attorney who worked as a federal procurement specialist for 40 years.
The consequences of accepting a gift, no matter how it is transferred, could be far-reaching, Lyon said, and officials “may not grasp the harm first.”
Tilipman agreed that the risk of balloon obligations is particularly pronounced in terms of technology and IT. Users rely on one provider, which leads to “vendor lock-in,” she said. It’s quick to tell you what Starlink’s donation will be like, but Microsoft’s White House offer offers a preview of what’s possible. In line with its original goal, the world’s largest software company continues to expand its footprint across the federal government, avoiding competition.
Sources from last year’s Microsoft investigation recently called on people to follow. He told me that the government would be locked up in Microsoft and that rivals would continue to be locked out of federal contract opportunities. When I asked for an example, he shared a 2024 document from the Defense Information Systems Agency or DISA that handled it for the Department of Defense. The document describes “fair opportunity exceptions” in the procurement of various new IT services, saying that the $5.2 million order will be “issued directly to Microsoft Corporation.”
Justification? Switching from Microsoft to another provider “will have additional time, effort, cost and performance impacts.” DISA did not respond to email questions.
Doris Burke contributed to his research.
