Microsoft charges excessive fees to customers of rival cloud companies, British lawsuit says

London — microsoft It was accused on Tuesday of unfairly overcharging customers of a rival cloud company in a lawsuit seeking more than 1 billion pounds ($1.27 billion) in damages.

The lawsuit alleges that customers use: Amazon Web Services (AWS), Google cloud platform or alibaba As a major competitor to Microsoft’s Azure cloud, you’ll have to pay more to license Microsoft’s cloud-based Windows Server software on a competitor’s infrastructure.

Microsoft offers lower prices to businesses running Windows Server on Azure than direct competitors like AWS, Google Cloud, or Alibaba Cloud. The lawsuit alleges that companies that operate widely used server software are essentially charging excessive fees to use alternative cloud computing solutions.

Microsoft is leveraging its dominant market position in cloud-based server operating systems by driving higher prices and enticing customers to move to Azure, he added. Competition lawyer Maria Luisa Stasi says the claimants are seeking more than £1 billion in compensation for the companies they have harmed.

Microsoft declined to comment on the lawsuit.

“Put simply, Microsoft is punishing Google, Amazon and Alibaba by forcing British businesses and organizations that use them for cloud computing to pay more for Windows Server,” said Stasi, legal and policy director at digital rights advocacy group Article19. He said. In a statement shared with CNBC.

“By doing this, Microsoft is trying to force customers to use its cloud computing service, Azure, and limit competition in the sector.”

She added that the aim of the lawsuit was to “challenge Microsoft’s anti-competitive behavior, reveal exactly how many businesses have been unlawfully penalized in the UK, and put pressure on organizations that have been unfairly overcharged to return money.” Yes.

Thousands of UK companies and organizations are taking part in the lawsuit, which is an “opt-out” class action. This means that all potentially affected companies will be automatically counted and could receive a payout if Microsoft loses.

Stasi represents clients at Amazon, Google and Alibaba, but does not represent those companies, her spokeswoman told CNBC.

The development comes as the UK’s Competition and Markets Authority is preparing “action” remedies to address anti-competitive practices in the cloud industry following a months-long investigation, with two sources telling CNBC last month that a tentative decision could come as early as this week. said.

The CMA declined to comment on the specific timing of the interim decision. However, a deadline was previously set for November-December 2024.

Earlier this year, Microsoft signed a 20 million euro ($21 million) settlement with cloud trade body CISPE and its members, filing an EU antitrust complaint accusing the tech giant of unfair software licensing practices in its cloud division. The lawsuit has ended.

With the deal, Microsoft agreed to charge companies the same price for running their software on the smaller cloud company’s systems as it does on its own Azure platform.

However, last September, Google filed a new antitrust lawsuit against Google with the European Commission, the EU’s executive body.

The lawsuit argued that Microsoft’s software licensing terms effectively tie businesses to the Azure platform and make the transition difficult, thereby exerting control over the cloud market.

Solange Viegas Dos Reis, chief legal officer at French cloud computing company OVHCloud, told CNBC that some cloud hyperscalers are essentially “selling together two products that should be completely separate”: widely used software and cloud infrastructure.

There is also the issue of hyperscalers, which provide more functionality in software when running on their own cloud service rather than on a third-party cloud service, Dos Reis said, without singling out a specific vendor.

According to data from Synergy Research Group, between 2017 and 2022, the market share of European cloud companies halved from 27% to 13%, while the overall European cloud market grew fivefold to €10.4 billion (110%). billion dollars), falling behind international competitors.

Dos Reis told CNBC last week that the issue of software licensing in the cloud is one that has not previously been assessed, adding that OVH has “a lot of hope” for the CMA’s cloud competition case.

OVHCloud agreed to its own settlement with Microsoft last July, which led Microsoft to dismiss its EU antitrust case against the US tech giant.