Ukraine – 01/07/2022: In this photo illustration, the Microsoft Azure logo can be seen displayed on a smartphone. (Photo illustration: Igor Golovniov/SOPA Images/LightRocket, Getty Images)
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London — microsoft 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 Cloud (all major competitors to Microsoft’s Azure cloud) are forced to pay more to license the tech giant’s cloud-based Windows Server software on their rival’s infrastructure. There is.
Microsoft offers companies running Windows Server on Azure lower prices than direct competitors such as AWS, Google’s cloud, and Alibaba Cloud. The lawsuit alleges that companies running widely used server software are essentially being overcharged for using alternative cloud computing solutions.
It added that Microsoft is leveraging its dominant market position in cloud-based server operating systems by extracting higher prices and encouraging customers to migrate to Azure. The plaintiff, competition lawyer Maria Luisa Stasi, is seeking more than £1 billion in compensation from the affected companies.
Microsoft declined to comment on the lawsuit.
Mr Stasi, head of law and policy at digital rights advocacy group Article 19, said: “Simply put, Microsoft is forcing UK companies and organizations that use Google, Amazon and Alibaba for cloud computing to “We are punishing them by forcing them to pay additional fees to their servers.” said in a statement shared with CNBC.
“By doing so, Microsoft is forcing customers to use its Azure cloud computing service and attempting to limit competition in this area.”
He said the case would “challenge Microsoft’s anti-competitive conduct, reveal exactly how much UK businesses are being wrongfully penalized and urge organizations that have been unfairly overcharged to return money.” “It is aimed at that,” he added.
Thousands of businesses and organizations across the UK are participating in the lawsuit, which is an “opt-out” class action. This means potentially affected companies will be automatically counted and can receive dividends if Microsoft loses.
Stasi represents customers of Amazon, Google and Alibaba, but does not represent any of those companies, her spokesperson told CNBC.
CMA preparing competition remedies
This development follows work from the UK Competition and Markets Authority. After months of investigation, the company is preparing “behavioral” remedies to address anti-competitive practices in the cloud industry, two sources told CNBC last month, with a tentative decision expected as early as this week. He said it was possible.
The CMA declined to comment on the specific timing of the interim decision. However, until now, the deadline was set between November and December 2024.
Earlier this year, Microsoft entered into a €20 million ($21 million) settlement with cloud industry association CISPE and its members to settle an EU antitrust lawsuit accusing it of unfair software licensing practices in its cloud division. was terminated.
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Under the deal, Microsoft agreed to charge small cloud companies the same fees to run its software on their systems as it does to run it on its own Azure platform.
However, in September, Google filed new antitrust complaints against Google with the European Commission, the EU’s enforcement agency.
The lawsuit argued that Microsoft’s software license terms effectively lock companies into the company’s Azure platform, making migration difficult and thus dominating the cloud market.
Solange Viegas dos Reis, chief legal officer at French cloud computing company OVHCloud, told CNBC that some cloud hyperscalers are essentially a combination of widely used software and cloud infrastructure. “We are selling two products together that should be completely separated,” he said.
There’s also the issue that hyperscalers offer more functionality for their software when running on their own cloud services than on third-party cloud services, Dos Reis said, without naming specific vendors. stated.
According to Synergy Research Group data, European cloud companies will increase their market share from 27% to 13% from 2017 to 2022, as the overall European cloud market grows five-fold to €10.4 billion ($11 billion). has fallen by half, leaving it behind its international rivals.
Dos Reis said in an interview with CNBC last week that the issue of software licensing in the cloud is a previously under-appreciated issue, adding that OVH has “high hopes” for the CMA’s cloud competition case.
OVHCloud agreed to a settlement with Microsoft in July that saw the company drop the EU’s own antitrust claims against the US tech giant.