Google complains to EU over Microsoft cloud practices

By Philip Blenkinsop

BRUSSELS (Reuters) -Alphabet unit Google filed a complaint to the European Commission on Wednesday against what it said were Microsoft’s anti-competitive practices to lock customers into Microsoft’s cloud platform Azure.

Google, whose biggest cloud computing rivals are Microsoft and Amazon Web Services, said Microsoft was exploiting its dominant Windows Server operating system to prevent competition.

Google Cloud Vice President Amit Zavery told a briefing that Microsoft made customers pay a 400% mark-up to keep running Windows Server on rival cloud computing operators. This did not apply if they used Azure. Users of rival cloud systems would also get later and more limited security updates, Zavery said.

Google pointed to a 2023 study by cloud services organisation CISPE which found that European businesses and public sector bodies were paying up to 1 billion euros ($1.12 billion) per year on Microsoft licensing penalties.

Microsoft in July clinched a 20-million-euro deal to settle an antitrust complaint about its cloud computing licensing practices with CISPE, averting an EU investigation. However, the settlement did not include Amazon Web Services (AWS), Google Cloud Platform and AliCloud, prompting criticism from the first two companies.

Microsoft said it had settled amicably similar concerns raised by European cloud providers, adding that Google had hoped they would keep litigating.

“Having failed to persuade European companies, we expect Google similarly will fail to persuade the European Commission,” a Microsoft spokesperson said in a statement.

Google said Microsoft had locked customers into using collaboration application Teams even when they preferred alternatives and was using the same playbook for Azure.

“The time to act is now,” Zavery said. “The cloud market will get more and more restrictive if things don’t happen now.”

Google said that only regulatory action would end Microsoft’s “vendor lock” and level the playing field for competitors.

“We are asking the European Commission to act now. We’re asking them to really look at this issue, help customers decide and keep the choices going for them,” Zavery said.

Google said Microsoft’s Windows Server and various Microsoft products had a market share of over 70% in European businesses.

For years, Microsoft allowed its products to work on any hardware, such as laptops, but placed restrictions in 2019 as it entered the cloud business.

The cloud computing business is growing at around 20% per year in the EU, with plenty of potential. A McKinsey study in April showed that two-thirds of EU companies had less than half of their workloads on the cloud.

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(Reporting by Philip BlenkinsopEditing by Tomasz Janowski, Kirsten Donovan)