The Wall Street Journal reported that the investigation began in January while Microsoft was preparing to argue its appeal against antitrust claims from last year.

The WSJ reported that a civil subpoena served on Microsoft three weeks ago by the Justice Department demanded all internal documents on the company's $135 million investment in Corel last October.

Canada-based Corel bought the WordPerfect word processing software application, a direct competitor to Microsoft's Word, some years ago to complement such other products as its well-known CorelDraw drawing programs.

Corel, which recently posted declining sales and a fourth-quarter loss, competes directly with Microsoft in the office application suite segment, despite Microsoft Office commanding more than 90 percent share of the market.

Of particular interest to the investigation is a version of Corel WordPerfect Office for the increasingly popular Linux operating system. Linux, despite having a tiny percentage of the desktop OS market, is a direct competitor to Microsoft's dominant Windows platform.

The WSJ reported that while a Justice Department spokeswoman simply said, "We are looking at the transaction," a Microsoft spokesman commented that the investigation is narrowly focused and that the company was cooperating with the federal agency.

The Justice Department is also reportedly looking into Microsoft's upcoming purchase of Great Plains Software Inc. for over $1 billion, although that is apparently more of a routine review under the Hart-Scott-Rodino merger law.