Anamika Dey, editor
Brief news
- Google filed an antitrust complaint against Microsoft, alleging discriminatory licensing practices that hinder competition in the cloud computing market.
- The complaint highlights Microsoft’s Azure cloud services’ restrictive licensing terms, which reportedly lock clients into their ecosystem and impose significant costs on businesses wishing to switch providers.
- Microsoft anticipates the European Commission will dismiss Google’s claims, citing a recent settlement with CISPE that addressed similar competition concerns.
Detailed news
Microsoft was accused of employing discriminatory licensing contracts to suppress competition in the multibillion-dollar cloud computing industry in an antitrust complaint that Google submitted to the European Commission on Wednesday.
The core of Google’s complaint is the assertion that Microsoft employs unjust licensing terms to “lock in” clients and exert control over the cloud market.
Google claims that Microsoft’s Azure cloud infrastructure offering can create a challenge for its extensive client base to utilize any other option than Azure, as a result of Microsoft’s prevalent Windows Server and Microsoft Office products.
The internet giant complained in its complaint that the cloud licensing terms of Microsoft impose restrictions that impede customers’ ability to transfer their applications from Microsoft’s Azure cloud technology to competitors’ clouds, despite the absence of technical obstacles.
Google cited a 2023 study by CISPE, a trade body for the cloud computing sector, in which it was revealed that European businesses and public sector organizations have been compelled to pay the firm up to 1 billion euros ($1.1 billion) annually in licensing penalties as a result of restrictions on customers’ ability to switch from one cloud provider to another.
In July, CISPE and its members reached a settlement with Microsoft that would require the company to implement modifications to mitigate competition concerns. Subsequently, Google filed an antitrust complaint.
Microsoft stated in a statement on Wednesday that it anticipates the European Commission dismissing Google’s complaint in light of the CISPE settlement.
“Microsoft resolved similar concerns raised by European cloud providers amicably, despite Google’s expectation that they would continue to litigate,” a Microsoft spokesperson informed CNBC via email. “We anticipate that Google will be unable to persuade the European Commission in the same way as it has been unsuccessful in persuading European companies.”
Microsoft’s cloud “tax” is the subject of discussion.
In a summary of the complaint, Google, which is third in the global cloud computing market behind market leaders Amazon Web Services and Microsoft Azure, stated that Microsoft “harms cybersecurity and undermines innovation.”
Google asserts that organizations that utilize Microsoft’s Office suite of productivity tools and other applications on Google Cloud Platform or other competing platforms are obligated to pay a “tax” in the form of sizable licensing fees to Microsoft.
Microsoft’s acquisition of over 60% to 70% of all new British businesses in 2021 and 2022 was determined by a U.K. Competition and Markets Authority study, according to Google, which found that Microsoft was undermining competition in the cloud.
Google also suggested that Microsoft’s cloud practices may have increased the likelihood of security issues for businesses.
Amit Zavery, the director of platform at Google Cloud, stated in an interview with CNBC’s Arjun Kharpal on Wednesday that Google is of the opinion that Microsoft is “100%” in violation of EU antitrust regulations.
Zavery stated, “We would like the cloud market to continue to be vibrant and open to all providers, including European vendors, vendors such as ourselves, AWS, and others.”
“The restrictions that exist today do not provide customers with a choice,” he stated, stating that Microsoft implemented them after recognizing the significant commercial potential of the technology.
“Therefore, we would prefer that those limitations be lifted, enabling customers to select and utilize the cloud provider that they deem to be the most suitable for their commercial and technical requirements,” he concluded.
Zavery stated to CNBC that Google and cloud customers in general would be “extremely pleased” if Microsoft modifies its cloud licensing terms in response to its complaint.
Following the July settlement agreement with Microsoft, CISPE announced that the technology firm would collaborate with its members to introduce an improved version of Azure Stack HCI, a cloud infrastructure product, that would provide the same features as those presently available to Microsoft customers who use its Azure product.
Google, a non-member of the CISPE, expressed its dissatisfaction with the settlement and declined to participate in the agreement. Alibaba’s cloud unit AliCloud and Amazon Web Services, which is a CISPE member, also declined to participate in the settlement.
Microsoft has refuted the assertion that its cloud practices are detrimental to competition. The company stated that it “firmly believes that the cloud services market is functioning well” in response to a cloud market study initiated by the U.K.’s Competition and Markets Authority.
Source : CNBC News
