UKRAINE – JANUARY 7, 2022: In this photo illustration, the Microsoft Azure logo is shown on a smartphone. (Photo illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images)
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london – Microsoft On Tuesday, the company was accused in a lawsuit of unfairly overcharging customers of rival cloud companies, claiming damages of more than 1 billion pounds ($1.27 billion).
The lawsuit accuses customers of using Amazon Web Services (AWS), Google cloud platform or Alibaba Cloud Computing – all major competitors to Microsoft’s Azure cloud – are being forced to pay more to license the tech giant’s cloud-based Windows Server software on rival infrastructure.
Microsoft offers cheaper prices for companies running Windows Server on Azure compared to direct competitors such as AWS, Google Cloud or Alibaba Cloud. The lawsuit alleges that companies running widely used server software were actually overcharged for using alternative cloud computing solutions.
It added that Microsoft is leveraging its dominant market position in cloud-based server operating systems by extracting higher prices and inducing customers to switch to Azure. The plaintiff, Maria Luisa Stasi, is a competition lawyer who is seeking more than £1bn in compensation for affected companies.
Microsoft had no immediate comment when contacted by CNBC.
Stacey, head of legal and policy at digital rights advocacy group Article19, said: “In short, Microsoft is punishing UK businesses and organizations that use Google, Amazon and Alibaba for cloud computing, forcing them to pay more for Windows Server. .
“By doing this, Microsoft is trying to force customers to use its cloud computing service Azure and limit competition in the industry.”
She added that the lawsuit “aims to challenge Microsoft’s anti-competitive behavior, prompt them to disclose exactly how much UK businesses have been unlawfully penalized, and return funds to organizations that have been unfairly overcharged.”
Thousands of British companies and organizations are represented in the lawsuit, which is an “opt-out” collective action. This means any potentially affected companies are automatically counted, and if Microsoft loses, they can receive compensation.
A spokesperson for the Stasi told CNBC that the Stasi represents customers of Amazon, Google and Alibaba but does not represent any of those companies.
CMA prepares competition remedies
The development comes as the UK Competition and Markets Authority Developing “conduct” remedies for anti-competitive conduct in the cloud industry After months of investigation, two sources told CNBC last month that an interim decision could be made as soon as this week.
The CMA declined to comment on the exact timing of its interim decision. However, it previously set a deadline of November to December 2024.
Earlier this year, Microsoft reached a 20 million euro ($21 million) settlement with cloud trade body CISPE and its members, ending an EU antitrust complaint accusing the tech giant of unfair software licensing practices in its cloud unit.
In the deal, Microsoft agreed to charge companies that run its software on smaller cloud companies’ systems the same price as if it ran on its own Azure platform.
But in September this year, Google filed a new antitrust complaint against Google with the European Commission, the EU’s executive agency.
The lawsuit alleges that Microsoft’s software licensing terms effectively lock companies into its Azure platform, making it more difficult to switch and thereby exerting control over the cloud market.
Solange Viegas Dos Reis, chief legal officer of French cloud computing company OVHCloud, told CNBC that some cloud hyperscale companies are essentially “selling two products that should be completely separate together” – widely used software and cloud infrastructure.
There’s also the issue that when hyperscalers run their own cloud services, their software offers more functionality than when it runs on third-party cloud services, Dos Reis said, without singling out any specific providers. business.
Data from Synergy Research Group shows that from 2017 to 2022, the market share of European cloud companies has halved from 27% to 13%, lagging behind international competitors, while the entire European cloud market has grown fivefold, reaching 10.4 billion euros ($11 billion).
Dos Reis told CNBC last week that the issue of software licensing in the cloud had not previously been assessed, adding that OVH had “high hopes” for the CMA’s cloud competition case.
OVHCloud reached a settlement with Microsoft in July and dropped an EU antitrust complaint against the U.S. tech giant.
