Microsoft has attracted the government to its products with freebies. Can Elon Musk's Stars and Stripes do the same?

A few weeks ago, my colleague Doris Burke sent me a story from the New York Times, which gave us two deja vu.

The work reported that Starlink, a satellite internet provider run by SpaceX, is “donated” in the words of Trump administration officials to improve wireless connectivity and battery reception in the White House.

Donations are confused by some former officials quoted in the story. But this immediately shocked us because it took us several months to report, which is a potential iteration of the Trump era. In this survey, we focus on deals between Microsoft and Biden’s administration. At the heart of the arrangement is something that most consumers understand intuitively: “Free” offers usually have a reward.

Microsoft began “free” cybersecurity upgrades and consulting services to the federal government in 2021 after President Joe Biden urged tech companies to help strengthen U.S. cyber defenses. Our investigation shows that the ostensibly selfless White House offers a more complex, profit-driven agenda within Microsoft. The company knows that the well-known takeaway is that once the free trial is over, federal customers who accept the offer and install the upgrade will effectively lock them up as it would be expensive and clumsy to switch to competitors at the time.

Former Microsoft employees told me that the company's offer was similar to drug dealers attracting users with free samples. “If we give you a crack and you'll crack, you'll enjoy the crack.” “Then when the time comes when we take the crack away, your end user will say, 'Don't take it from me.' And you'll be forced to pay me.”

Microsoft does implement what it does internally. When the free trial ended, huge snippets of the federal government retained the upgrade and began paying for higher subscription fees, freeing up billions of dollars the company will sell in the future.

Microsoft has said that all agreements with the government are “ethically compliant with federal laws and regulations” and that during this period, its sole goal is to “improve the security posture of federal agencies that are constantly being targeted by established nation-state threat actors.”

But government contract experts told me that the company's drills were legally fragile. They circumvented the competitive bidding process, a cornerstone of government procurement, shutting out competitors for lucrative federal operations and expanding into innovations in the industry.

After reading stories about Starlink’s time donations to the White House, I signed in with these experts.

“It doesn't matter whether it was Microsoft last year or tomorrow's Starlink or another company's Starlink,” said Jessica Tillipman, associate dean of government procurement law studies at George Washington University School of Law. “Whenever you do that, it's a backdoor in the competition process, making sure we have the best suppliers to deliver the best goods and services.”

Often, during a competitive bidding process, the government solicits suggestions from suppliers for goods and services to be purchased. These suppliers then submit their proposals to the government, and in theory, the recommendations choose the best choice in terms of quality and cost. Giveaways avoid the whole process.

However, hearing Commerce Secretary Howard Lutnick tell the incident, the Trump administration not only wants to normalize these donations, but encourages them to do so in Washington.

Last month, during a appearance on the Silicon Valley podcast “Allin”, he proposed his own concept of a “free” supplier that “gives the product to the government.” In this episode released a few days after the New York Times published the Star Link story, Lutnik said that such donors don’t have to “go through the whole process of being the right supplier because you give it to us.” Later, he added: “You don’t have to sign the form of conflict and all of this stuff because you don’t work for the government.

Since President Donald Trump took office in January, Musk, listed as an unpaid “special government employee”, has shown that he has provided services to the president and that products from the company to the government “do not pay taxpayers.” The White House donation is just the latest move. In February, he instructed his company SpaceX to ship 4,000 terminals for free to install its Starlink Satellite Internet service.

In our Microsoft survey, salespeople told me that within the company, the explicit “final game” converts government users into subscriptions that are upgraded after a free trial and ultimately gained market share in the cloud platform Azure. It is not clear what the final game for Musk and Starlink is. None of them answered email questions.

Federal law has long tried to limit donations to the government, in large part to maintain oversight of spending.

At least as early as the 19th century, executive staff signed contracts without seeking the necessary funds from Congress, which should have had the power to wallets. Members of Congress do not want taxpayers to get stuck because of the lack of funding for Congress, so they passed the Anti-Lowkey Act, which is still in effect today. Part of this restricts “voluntary service” to prevent volunteers who later demand payments from governments.

But in 1947, the Office of General Accounting (now known as the Office of Government Responsibility) made an opinion on fiscal law, exempting it: so-called “free service” could be allowed as long as the parties agree in advance to the donor's exemption from payment.

Microsoft used the exemption to transfer its $150 million consulting services to its government clients and signed a so-called free service agreement. To give away actual cybersecurity products, the company offers an “100% discount” for its existing federal customers for up to a year.

It is not clear whether Musk's giveaway has reached a useless service agreement. The White House and the FAA did not answer written questions. SpaceX doesn't. An official told the New York Times last month that attorneys who oversee ethics in the White House lawyer’s office reviewed the Star Link donation to the White House.

For the experts I have consulted, a written agreement may help the company comply with the law, but certainly will not have its spirit. “Just because something is technically legal,” said attorney Eve Lyon, who worked as a procurement expert in the federal government for forty years.

Lyon said the consequences of accepting the giveaway, no matter how it is transferred, can reach distant consequences, and government officials “will not grasp the harmful from the start.”

Tillipman agreed, saying that the risk of pop-up obligations is particularly evident in technology and its aspects. She said that users rely on one provider, resulting in a “supplier lockdown.” Now say what will happen to Starlink's donation, but Microsoft's White House offer provides a possible preview. From the outset, the world's largest software company continued to expand its footprint in the federal government while avoiding competition.

Sources from last year's Microsoft investigation recently called for a catch-up. He told me that as the government locked in on Microsoft, competitors continued to be shut out by federal contract opportunities. When I asked for an example, he shared a 2024 document from the Defense Information Systems Agency or DISA, which was handled by the Department of Defense. The document describes “fair opportunity exceptions” in the procurement of various new IT services, saying the $5.2 million order “will be sent directly to Microsoft Corporation.”

reason? Switching from Microsoft to another provider “will bring additional time, effort, cost and performance impact”. DISA did not answer email questions.