Google has formally lodged an antitrust complaint with the European Commission, asserting that Microsoft engages in unfair licensing practices that hinder competition within the cloud computing sector, a market valued in the billions. The complaint centers on claims that Microsoft’s licensing terms effectively “lock in” clients, thereby consolidating control over the cloud market.
Google’s allegations highlight Microsoft’s use of its dominant Windows Server and Microsoft Office products to complicate the ability of its sizable client base to utilize alternatives to the Azure cloud infrastructure. According to Google, these restrictive licensing terms make it challenging for customers to transition their workloads from Azure to other cloud service providers, notwithstanding the absence of technical barriers.
A study by CISPE, a trade body for the cloud computing sector, cited by Google, indicates that European businesses and public sector entities have incurred up to 1 billion euros ($1.1 billion) annually in licensing penalties due to these restrictions, which limit the ability to switch cloud providers.
Google, ranking third globally in the cloud computing market behind Amazon Web Services and Microsoft Azure, asserts that Microsoft’s conduct undermines cybersecurity and stifles innovation. It further contends that businesses using Microsoft’s Office suite on Google Cloud Platform or other competing services are subjected to punitive licensing fees to Microsoft, effectively imposing a “tax.”
Referencing a study by the U.K. Competition and Markets Authority, Google notes that Microsoft captured over 60% to 70% of new British businesses in 2021 and 2022. Additionally, Google argues that Microsoft’s practices potentially heighten security risks for businesses.
In an interview with CNBC, Amit Zavery, Google Cloud’s head of platform, expressed confidence that Microsoft is violating EU antitrust regulations. Zavery emphasized the importance of maintaining a vibrant and open cloud market, free from the restrictions currently imposed by Microsoft. He advocated for the removal of these restrictions, enabling customers to choose cloud providers that best meet their commercial and technical needs.
Google’s antitrust complaint follows an agreement in July between multiple cloud companies and Microsoft to address competition concerns. Despite this settlement, which includes plans for Microsoft to collaborate with CISPE members to improve Azure Stack HCI, Google opted not to participate, voicing disagreement with the resolution. Notably, Amazon Web Services and Alibaba’s AliCloud, both CISPE members, also refrained from joining the settlement.
Microsoft, in response, has denied allegations that its cloud practices are detrimental to competition. The company maintains that the cloud services market is functioning effectively, as communicated during a market study by the U.K.’s Competition and Markets Authority.
