Google submitted an antitrust grievance with the European Commission on Wednesday charging Microsoft of utilizing unreasonable licensing agreements to suppress competitors in the multibillion-dollar cloud computer sector.
At the heart of Google’s grievance is the claims that Microsoft makes use of unreasonable licensing terms to “lock in” customers and put in control over the cloud market.
Google affirms that Microsoft, via its leading Windows Server and Microsoft Office items, can make it tough for its enormous lineup of customers to make use of anything yet its Azure cloud framework offering.
The web titan stated in its grievance that constraints had in Microsoft’s cloud licensing terms make it harder for clients to relocate their work from Microsoft’s Azure cloud modern technology to rivals’ clouds, regardless of there being no technological obstacles to doing so.
European services and public market companies have actually been required to pay the tighten to 1 billion euros ($ 1.1 billion) a year in licensing fines as a result of constraints on clients’ capability to switch over from one cloud supplier to an additional, Google stated, pointing out a 2023 research study by CISPE, a profession body for the cloud computer market.
The antitrust grievance from Google shows up after CISPE and its participants in July consented to a negotiation with Microsoft which would certainly see the company make adjustments to deal with competitors issues.
Referring to the CISPE negotiation, Microsoft stated in a declaration Wednesday that it anticipates the European Commission, the exec body of the European Union, to reject Google’s grievance.
“Microsoft settled amicably similar concerns raised by European cloud providers, even after Google hoped they would keep litigating,” a Microsoft agent informed CNBC using e-mail. “Having failed to persuade European companies, we expect Google similarly will fail to persuade the European Commission.”
Microsoft’s cloud ‘tax obligation’ moot
In a recap of the grievance, Google– which places 3rd around the world in the cloud computer market behind market leaders Amazon Web Services and Microsoft Azure, respectively — said that Microsoft “harms cybersecurity and undermines innovation.”
According to Google, if a company runs Microsoft’s Office suite of productivity tools and other applications on Google Cloud Platform or other competing clouds, they are effectively required to pay a “tax” in the form of punchy licensing fees to Microsoft.
Google said Microsoft undermined competition in cloud, and referred to findings of a U.K. Competition and Markets Authority study which determined Microsoft acquired 60% to 70% of all new British cloud customers in 2021 and 2022.
Google also suggested that Microsoft’s cloud practices have potentially made businesses more prone to security issues.
In an interview with CNBC’s Arjun Kharpal on Wednesday, Amit Zavery, Google Cloud’s head of platform, said Google believes Microsoft is “100%” in violation of EU antitrust rules.
“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,” Zavery said.
“Today the restrictions does not allow choice for customers,” he said, adding that Microsoft included restrictions once it realized the massive commercial potential of the technology.
“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,” he added.
Zavery told CNBC that if Microsoft makes changes to its cloud licensing terms as a result of its complaint, Google and cloud customers more broadly would be “very happy.”
Following the July settlement agreement with Microsoft, CISPE said the tech giant would work with its members to release an enhanced version of Azure Stack HCI, a cloud infrastructure product, to offer the same features that Microsoft customers using its Azure product currently benefit from.
Google, which is not a CISPE member, said it disagreed with the settlement and chose not to participate in the agreement. Amazon Web Services, which is a CISPE member, and Alibaba‘s cloud unit AliCloud, also chose not to become part of the settlement.
For its part, Microsoft has denied that its cloud practices harm competition. In response to a cloud market study initiated by the U.K.’s Competition and Markets Authority, the firm said that it “firmly believes that the cloud services market is functioning well.”
Correction: A U.K. Competition and Markets Authority study determined Microsoft acquired 60% to 70% of all new British cloud customers in 2021 and 2022. An earlier version mischaracterized the findings.
