Google filed an antitrust complaint with the European Commission on Wednesday, accusing Microsoft of using unfair licensing contracts in its Azure cloud computing business to stifle competition. Google’s complaint alleges that Microsoft employs restrictive licensing terms to “lock in” clients, thereby exerting control over the cloud market. As the third-largest player in the global cloud computing market, behind Amazon Web Services and Microsoft Azure, Google contends that Microsoft’s licensing terms make it difficult for customers to move their workloads away from Azure to competitors’ clouds.
European businesses and public sector organizations reportedly pay up to 1 billion euros ($1.1 billion) annually in licensing penalties due to these restrictive terms, according to a 2023 study by CISPE, a trade body for the cloud computing sector. The complaint follows a July settlement between Microsoft and a group of cloud companies, including CISPE members, in which Microsoft agreed to address competition concerns. Microsoft responded to Google’s complaint by asserting that it expects the European Commission to dismiss the claims.
“Microsoft settled amicably similar concerns raised by European cloud providers, even after Google hoped they would keep litigating,” a Microsoft spokesperson said.
Google accuses Microsoft of stifling competition
“Having failed to persuade European companies, we expect Google similarly will fail to persuade the European Commission.”
At the core of Google’s antitrust complaint is the claim that Microsoft’s licensing terms effectively impose a “tax” on customers who use Microsoft’s Office suite and other applications on non-Azure cloud platforms.
This “tax,” in the form of high licensing fees, undermines competition, according to Google. Amit Zavery, Google Cloud’s head of platform, said that Microsoft is “100%” in violation of EU antitrust rules. “Today the restrictions do not allow choice for customers,” Zavery said, calling for the removal of these restrictions to foster a more open and competitive cloud market.
In response, Microsoft has denied any competitive harm arising from its cloud practices. The company stated that it “firmly believes that the cloud services market is functioning well.”
Google, which is not a CISPE member, chose not to participate in the July settlement agreement. Amazon Web Services, a CISPE member, and AliCloud also opted out of the settlement.
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