Google Calls for Antitrust Action against Microsoft in Cloud Computing Industry

Highlights

• Google formally requests UK antitrust action against Microsoft, alleging unfair cloud computing practices amid heightened global scrutiny of major tech players.
• The Competition and Markets Authority (CMA) launches an inquiry into the UK’s cloud computing industry prompted by Ofcom’s concerns over Amazon and Microsoft’s market dominance.
• As of 2022, AWS and Azure collectively hold 78%-94% of the British public cloud infrastructure market, compared to Google Cloud’s 5-10% share.
• Google accuses Microsoft of restricting customer choices with licensing practices; Microsoft updates rules, but Google contends changes fall short of addressing concerns.
• Amit Zavery, Google Cloud VP, criticizes Microsoft’s practices, highlighting Google’s commitment to a flexible multi-cloud approach.
• The dispute centers around Microsoft’s altered licensing terms for Windows and other cloud software, resulting in higher costs for customers favouring Google or AWS over Azure.
• Google submits six recommendations to the CMA, including measures to enhance interoperability and restrict Microsoft from withholding security updates for those switching providers.

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Google recently petitioned the Competition and Markets Authority (CMA), Britain’s antitrust regulator, to intervene and address what it perceives to be anticompetitive business practices by Microsoft in the cloud computing sector. The request comes amid rising global scrutiny of tech titans Microsoft and Amazon regarding their dominant positions within this market segment.

The Competition and Markets Authority (CMA) initiated an inquiry into Britain’s cloud computing industry in October following a referral by media regulator Ofcom, who highlighted Amazon and Microsoft’s market dominance as of 2022. Amazon Web Services (AWS) and Azure together held 78%-94% market share for British public cloud infrastructure services market; by comparison, Google Cloud division held 5-10%.

Google lodged a formal complaint against Microsoft for engaging in licensing practices that prevented customers from choosing alternative services, even alongside Azure. According to Google’s letter addressed to the Competition and Markets Authority (CMA), Microsoft had engaged in practices which engaged in unfair licensing practices which dissuaded customers from choosing alternative offerings despite potential advantages provided by competitors in terms of pricing, quality, security, innovation and features.

Microsoft had recently updated its licensing rules in response to such concerns, yet according to Google they failed to adequately address issues or satisfy competitors. A Microsoft spokesperson responded that their company collaborated with independent cloud providers around the world in order to address concerns and create opportunities – this resulted in over 100 providers worldwide benefitting from these changes.

Amit Zavery, Vice President of Google Cloud, voiced criticism against Microsoft’s practices while emphasizing Google’s multi-cloud approach that gives customers the flexibility to switch providers depending on their unique needs. Zavery voiced concerns that without being addressed promptly, these identified issues might shrink the market further and impede innovation and investment opportunities.

At the core of this dispute lies Microsoft’s decision to change terms regarding Windows and other software licenses in the cloud, leading to higher costs for customers choosing Google or AWS over Azure.

Google submitted six recommendations to the CMA, including measures designed to increase interoperability among Azure services, other cloud providers and services offered by other providers; as well as restricting Microsoft from withholding security updates from those switching providers.

The CMA has not provided its response to requests for comments regarding the matter, creating the potential for more developments to emerge in this ongoing antitrust battle.