Recently, my colleague Doris Burke shared a story from The New York Times that prompted a sense of déjà vu for both of us.

The article reported that Starlink, a satellite internet provider operated by Elon Musk’s SpaceX, had provided internet services to enhance wireless connectivity and cell reception at the White House, characterized by Trump administration officials as a “donation.”

This donation raised eyebrows among former officials quoted in the story, but it immediately resonated with us as a potential echo of a familiar business tactic we had investigated last year. In that investigation, we focused on the arrangements between Microsoft and the Biden administration, which centered around the concept that “free” offers often come with strings attached.

Microsoft had begun offering the federal government “free” cybersecurity upgrades and consulting services in 2021, following President Joe Biden’s call for tech companies to bolster the nation’s cyber defenses. Our investigation uncovered that this seemingly altruistic offer, known internally as the White House Offer, actually concealed a more complex agenda driven by profit. The company was aware that the catch was that once the free trial period ended, federal customers who had accepted the offer and installed the upgrades would be effectively locked into continuing to use them, as switching to a competitor would be both costly and cumbersome.

Former Microsoft employees likened the company’s strategy to a drug dealer providing free samples, saying, “If we give you the product, and you use it, you’ll enjoy it. And then when it’s time for us to take it away, your end users will say, ‘Don’t take it away from me.’ And you’ll be forced to pay me.”

Indeed, Microsoft’s predictions came true. When the free trials ended, large parts of the federal government retained the upgrades and started paying the higher subscription fees, unlocking billions of dollars in future sales for the company.

Microsoft maintained that all agreements with the government were “pursued ethically and in full compliance with federal laws and regulations” and that its sole goal during this period was “to enhance the security posture of federal agencies continuously targeted by sophisticated nation-state threat actors.”

However, experts on government contracting told me that the company’s maneuvers were legally questionable, as they circumvented the competitive bidding process that underpins government procurement. This not only shut out competitors from lucrative federal business but also stifled innovation in the industry.

After reading the Times story about Starlink’s donation to the White House, I revisited these experts.

“It doesn’t matter if it was Microsoft last year or Starlink today or another company tomorrow,” stated Jessica Tillipman, associate dean for government procurement law studies at George Washington University Law School. “Anytime you’re doing this, it’s a back door around the competition processes that ensure we have the best goods and services from the best vendors.”

Typically, in a competitive bidding process, the government solicits proposals from vendors for the goods and services it wishes to purchase. Vendors then submit their proposals, and the government chooses the best option based on quality and cost. Giveaways, however, circumvent this entire process.

Commerce Secretary Howard Lutnick, on the other hand, seems to want to not only normalize such donations but also encourage them across Washington.

Last month, during an appearance on the Silicon Valley podcast “All-In”, he floated the concept of a “gratis” vendor who “gives product to the government.” Lutnick suggested that such a donor would not need to go through the formal process of becoming a proper vendor because they are giving the product away. He added, “You don’t have to sign the conflict form and all this stuff because you’re not working for the government. You’re just giving stuff to the government. You are literally giving of yourself. You’re not looking for anything. You’re not taking any money.”

Since President Donald Trump took office in January, Musk, classified as an unpaid “special government employee,” has made a show of providing his services to the president and products from his companies to the government “at no cost to the taxpayer.” The White House donation was just the latest move. In February, he directed his company SpaceX to ship 4,000 terminals at no cost to the Federal Aviation Administration for installation of its Starlink satellite internet service.

During our Microsoft investigation, salespeople revealed that the company’s explicit “end game” was to convert government users to paid upgraded subscriptions after the free trial, ultimately gaining market share for Azure, its cloud platform. It’s unclear what the end game is for Musk and Starlink, as neither responded to emailed questions.

Federal law has long attempted to restrict donations to the government to maintain oversight on spending.

As far back as the 19th century, executive branch personnel were entering into contracts without seeking necessary funding from Congress, which was supposed to have the power of the purse. Lawmakers didn’t want taxpayers to be on the hook for spending that Congress hadn’t approved, so they passed the Antideficiency Act, a version of which remains in effect today. One portion restricted “voluntary services” to prevent a supposed volunteer from later demanding government payment.

However, in 1947, the General Accounting Office (now the Government Accountability Office) made an exemption: Providing “gratuitous services” would be allowed if the parties agreed “in writing and in advance” that the donor waives payment.

Microsoft utilized this exemption to transfer consulting services valued at $150 million to its government customers through gratuitous services agreements. To give away the actual cybersecurity products, the company provided existing federal customers with a “100% discount” for up to a year.

It is unclear whether gratuitous services agreements were in place for Musk’s giveaways. The White House and the FAA did not respond to written questions, nor did SpaceX. An official told The New York Times last month that a lawyer overseeing ethics issues in the White House Counsel’s Office had vetted the Starlink donation to the White House.

For the experts I consulted, the written agreements might help companies comply with the letter of the law but not with its spirit. “Just because something is technically legal does not make it right,” said Eve Lyon, an attorney who worked for four decades as a procurement specialist in the federal government.

The consequences of accepting a giveaway, regardless of how it’s transferred, can be far-reaching, Lyon said, and government officials “might not grasp the perniciousness at the outset.”

Tillipman agreed, stating that the risk of ballooning obligations is particularly pronounced when it comes to technology and IT, leading to “vendor lock-in.” It’s too soon to tell what will come of Starlink’s donations, but Microsoft’s White House Offer provides a preview of what’s possible. In line with its initial goal, the world’s biggest software company continues to expand its footprint across the federal government while sidestepping competition.

A source from last year’s Microsoft investigation recently called to catch up, sharing that with the government locked into Microsoft, rivals continue to be shut out of federal contracting opportunities. When asked for an example, he shared a 2024 document from the Defense Information Systems Agency (DISA), which handles IT for the Department of Defense, describing an “exception to fair opportunity” in the procurement of new IT services, stating the $5.2 million order “will be issued directly to Microsoft Corporation.”

The justification was that switching from Microsoft to another provider “would result in additional time, effort, costs, and performance impacts.” DISA did not respond to emailed questions.