Microsoft is at the center of a £1 billion ($1.27 billion) lawsuit filed in the U.K., accusing the tech giant of anti-competitive practices in the cloud computing market. The lawsuit, filed on behalf of thousands of British businesses and organizations, alleges that Microsoft unfairly overcharged customers of rival cloud providers, including Amazon Web Services (AWS), Google Cloud Platform, and Alibaba Cloud, by imposing higher licensing fees for its Windows Server software on these platforms compared to its own Azure cloud.
The Allegations
The complaint, led by competition lawyer Maria Luisa Stasi, claims that businesses in the U.K. have been penalized for choosing cloud services other than Microsoft’s Azure. By offering cheaper licensing rates for customers using Azure and significantly higher rates for those using rival platforms, Microsoft has allegedly leveraged its dominant market position to restrict competition and force businesses into its ecosystem.
“Put simply, Microsoft is punishing UK businesses and organizations for using Google, Amazon, and Alibaba for cloud computing by forcing them to pay more money for Windows Server,” Stasi said in a statement. The lawsuit argues that these practices are unlawful and represent a breach of competition laws. It seeks over £1 billion in compensation for affected businesses.
The case is being filed as an “opt-out” collective action, meaning all potentially affected organizations are automatically included in the claim unless they choose otherwise. If successful, businesses that were overcharged could receive payouts.
A Broader Pattern of Anti-Competitive Behavior?
This lawsuit is the latest in a series of allegations and complaints against Microsoft’s cloud licensing practices. Earlier this year, the European Union saw a €20 million settlement between Microsoft and CISPE, a cloud trade body, over similar claims of unfair cloud software pricing. While Microsoft agreed to offer equal pricing for its software on smaller rival platforms, new complaints have continued to surface.
In September, Google filed a fresh antitrust complaint with the European Commission, alleging that Microsoft’s licensing terms effectively lock businesses into its Azure platform. Critics argue that Microsoft bundles its widely-used software with Azure in a way that makes it harder for customers to switch providers, thus stifling competition in the cloud market.
Solange Viegas Dos Reis, Chief Legal Officer of French cloud company OVHCloud, pointed out that major cloud providers often combine their software offerings with their own infrastructure, making it difficult for independent providers to compete. “Some cloud hyperscalers are essentially selling together two products that should be totally separated,”
The Role of the UK’s Competition and Markets Authority
The U.K.’s Competition and Markets Authority (CMA) is also actively investigating anti-competitive practices in the cloud industry. A provisional decision on the matter is expected in the coming weeks, as the CMA continues to look into “behavioral remedies” aimed at curbing monopolistic behavior by major cloud providers.
The CMA’s investigation is particularly significant given the rapid growth of the cloud market. From 2017 to 2022, the European cloud market grew fivefold to €10.4 billion ($11 billion), but the market share of European providers fell from 27% to 13%, according to Synergy Research Group. Critics say this decline is partly due to unfair practices by hyperscalers like Microsoft, which dominate the market.
Microsoft’s Response and Industry Implications
Microsoft has yet to comment on the U.K. lawsuit. However, the company’s past settlements and ongoing regulatory scrutiny suggest it will face increasing pressure to address these allegations. The lawsuit could have far-reaching implications for the cloud industry, particularly in Europe, where regulators have shown a growing willingness to challenge dominant U.S. tech firms.
For businesses, the case highlights the importance of fair competition in the cloud computing space. Stasi emphasized the need to hold Microsoft accountable, stating, “This lawsuit aims to challenge Microsoft’s anti-competitive behavior, push them to reveal exactly how much businesses in the UK have been illegally penalized, and return the money to organizations that have been unfairly overcharged.”
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