Google has lodged an antitrust complaint with the European Commission, accusing Microsoft of employing unfair licensing contracts to suppress competition in the lucrative cloud-computing industry.
According to Google’s allegations, it claims that Microsoft uses restrictive licensing terms to “lock in” clients and dominate the cloud market.
The tech giant claims that Microsoft’s widely-used products, including Windows Server and Microsoft Office, create obstacles for clients, making it challenging to utilize alternatives to Microsoft’s Azure cloud infrastructure. The complaint asserts that the limitations imposed by Microsoft’s cloud licensing prevent customers from easily migrating their workloads to competing cloud services, despite the absence of any technical barriers to doing so.
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The complaint highlights that European businesses and public sector organizations have been subjected to licensing penalties amounting to up to 1 billion euros ($1.1 billion) annually due to the restrictions imposed on their ability to switch cloud providers, citing a 2023 study by CISPE, a trade body for the cloud sector.
Google’s antitrust complaint follows a July settlement between CISPE and Microsoft, where the tech giant agreed to implement changes to address competition concerns. In response, Microsoft expressed confidence that the European Commission would dismiss Google’s complaint, arguing that it had resolved similar concerns amicably. In a summary of its complaint, Google claimed that Microsoft’s actions not only stifled competition but also jeopardized cybersecurity and innovation.
It argued that companies using Microsoft’s Office suite on competing platforms like Google Cloud Platform effectively incur a “tax” in the form of steep licensing fees to Microsoft. Furthermore, Google referenced a study by the U.K. Competition and Markets Authority, indicating that Microsoft captured over 60% to 70% of new British businesses in 2021 and 2022.
Amit Zavery, head of platform at Google Cloud, stated that Google firmly believes Microsoft is violating EU antitrust rules and emphasized the need for a vibrant and open cloud market that includes various providers, including European vendors. He noted that Microsoft’s restrictions hinder customer choice and expressed hope that changes to Microsoft’s licensing terms would benefit both Google and the broader cloud customer base.
In his words,
“We would like the cloud market to remain and become very vibrant and open for all the providers including European vendors, vendors like us, AWS and others. Today the restrictions does not allow choice for customers. So we would want those restrictions to be removed and allow customers to have and choose whatever cloud provider they think is best for them commercially and technically.”
Microsoft, for its part, has denied that its cloud practices harm competition, asserting that the cloud services market is functioning effectively, following a study initiated by the U.K. Competition and Markets Authority.