Microsoft is facing a £1 billion lawsuit in the UK over allegations of anti-competitive pricing practices in its cloud computing services.
The lawsuit claims the tech giant unfairly overcharged businesses that use rival cloud platforms such as Amazon Web Services (AWS), Google Cloud, and Alibaba Cloud to host its widely-used Windows Server software.
The case is led by competition lawyer Maria Luisa Stasi, representing thousands of UK businesses and organizations affected by Microsoft’s pricing policies.
Allegations of overcharging
The lawsuit alleges that Microsoft offers cheaper licensing fees for Windows Server software on its own Azure cloud platform while charging higher fees for the same software hosted on competitors’ platforms.
This, the claim argues, forces customers to pay more when choosing alternative cloud computing solutions, effectively penalizing businesses for not using Azure.
“Put simply, Microsoft is punishing UK businesses and organisations for using Google, Amazon, and Alibaba for cloud computing by forcing them to pay more money for Windows Server.
“By doing so, Microsoft is trying to force customers into using its cloud computing service Azure and restricting competition in the sector,” Stasi stated.
Stasi further emphasized that the lawsuit seeks to expose the scale of the alleged overcharges and return the money to affected organizations.
Competition and regulatory scrutiny
- The lawsuit comes at a time when the U.K.’s Competition and Markets Authority (CMA) is intensifying its scrutiny of anti-competitive practices in the cloud industry. A provisional decision from the CMA on this matter is expected by December 2024.
- Microsoft has faced similar accusations in Europe, previously settling a 20 million euro antitrust complaint with CISPE, a cloud trade body, in March 2024. That agreement led Microsoft to standardize pricing for its software across smaller cloud companies and Azure.
- However, Google filed a fresh antitrust complaint with the European Commission in September, alleging that Microsoft’s licensing practices restrict customers’ ability to switch to other platforms.
Impact on Cloud Market Dynamics
- The broader cloud market has seen significant growth, but European cloud providers have struggled to compete with U.S. giants. From 2017 to 2022, European cloud firms’ market share dropped from 27% to 13%, according to Synergy Research Group.
- Solange Viegas Dos Reis, chief legal officer of French cloud provider OVHCloud, highlighted concerns about hyperscalers like Microsoft bundling software and infrastructure, making it harder for third-party platforms to compete.
- OVHCloud reached a separate settlement with Microsoft in July, resolving its own antitrust complaint.