Microsoft is facing legal action in the UK over claims its licensing practices unfairly raise costs for businesses that use rival cloud providers such as Amazon, Google and Alibaba.
According to ReutersThe case, brought by competition lawyer Maria Luisa Stasi at the Competition Appeal Tribunal, could see British businesses collectively seek over £1 billion ($1.27 billion) in damages.
The Stasi claims Microsoft is penalizing UK businesses for using a competitor’s cloud services by imposing higher fees for Windows Server software. They argue that these practices are designed to drive customers to Microsoft’s Azure platform and thereby reduce competition in the cloud computing sector.
The lawsuit comes as the UK’s Competition and Markets Authority (CMA) investigates the country’s cloud computing market. Investigations into market leaders Amazon AWS, Microsoft Azure and Google Cloud are expected to yield further results soon. Microsoft’s license terms for products such as Windows Server and Microsoft 365 are under review.
Licensing practices under fire
In 2020, Microsoft introduced new license fees for running its software on major cloud platforms. Critics say his changes incentivize customers to favor Azure. According to CMA data, Microsoft has gained more customers than competitors since the introduction of fees.
Across the Atlantic, the US Federal Trade Commission (FTC) has launched an antitrust investigation into Microsoft’s cloud computing practices. According to the allegations, the company uses restrictive license terms to prevent customers from switching to competing platforms.
Microsoft faced similar challenges in continental Europe and Ireland. Earlier this year, the company settled an antitrust complaint with Cloud Infrastructure Providers in Europe (CISPE) for €20 million ($21 million), agreeing to standardize prices between smaller cloud firms and Azure. However, Google has filed a new complaint with the European Commission, accusing Microsoft of using license terms to lock customers into the Azure ecosystem.
French cloud provider OVHCloud has expressed concern about hyperscalers bundling widely used software with their cloud infrastructure, limiting functionality on third-party platforms. OVHCloud settled its antitrust case with Microsoft in July, dropping the complaints after reaching a settlement.
Growing market, shrinking competition
Data from Synergy Research Group shows the challenges facing European cloud providers. Between 2017 and 2022, their market share fell from 27% to 13%, even though the overall market grew fivefold to €10.4 billion ($11 billion).
As the CMA’s investigation nears its conclusion, businesses and regulators around the world are calling for clearer policies to promote competition and ensure fair practices in the cloud computing industry.
(Image from Pixabay)
See also: UK awarded £1bn contract to boost public sector cloud adoption
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