Google accuses Microsoft of anti-competitive cloud practices, files complaint to EU

In a move to challenge Microsoft's dominance in the cloud computing market, Google has filed an antitrust complaint with the European Commission, accusing Microsoft of anti-competitive practices designed to lock customers into its Azure platform, as per reports.

Google, whose cloud computing business competes directly with Microsoft's Azure and Amazon Web Services, alleges that Microsoft is leveraging its dominant position in the Windows Server operating system to stifle competition. Amit Zavery, Google Cloud Vice President, highlighted that Microsoft charges customers a 400% markup for running Windows Server on rival cloud providers, while offering no such premium for Azure. Additionally, Zavery claims that users of competing cloud systems receive delayed and limited security updates compared to Azure users.

Google points to a 2023 study by CISPE, a cloud services organization, which found that European businesses and public sector entities are paying up to €1 billion ($1.12 billion) annually in Microsoft licensing penalties. In July, Microsoft settled a similar antitrust complaint with CISPE concerning cloud computing licensing practices, averting an EU investigation. However, the settlement excluded AWS, Google Cloud Platform, and AliCloud, leading to criticism from the first two companies.

Google further alleges that Microsoft has engaged in similar tactics with its collaboration application, Teams, effectively locking customers into using the application even when they prefer alternatives.

"The time to act is now," said Zavery. "The cloud market will become increasingly restrictive if action isn't taken."

Google contends that only regulatory intervention can effectively break Microsoft's "vendor lock" and create a level playing field for competitors. They are calling on the European Commission to investigate Microsoft's practices and ensure that customers have genuine choices in the cloud computing market.

Google emphasizes that Microsoft's Windows Server and other products hold a market share exceeding 70% in European businesses. For years, Microsoft permitted its products to run on any hardware. However, in 2019, as the company expanded into the cloud business, restrictions were imposed.

The cloud computing market in the EU is growing rapidly, projected to expand at a rate of 20% per year. A McKinsey study in April found that two-thirds of EU companies have migrated less than half of their workloads to the cloud, demonstrating significant untapped potential.