Microsoft faces new EU antitrust complaint on cloud computing practices

Amazon is the market leader in the cloud computing sector, followed by Microsoft and Alphabet unit Google.

Published - November 09, 2022 08:23 pm IST

Smartphone is seen in front of Microsoft logo displayed in this illustration taken

Smartphone is seen in front of Microsoft logo displayed in this illustration taken | Photo Credit: Dado Ruvic

Microsoft faces a new antitrust complaint over its cloud computing practices as trade group CISPE, whose members include Amazon, took its grievance to European Union antitrust regulators on Wednesday.

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CISPE has alleged that Microsoft's new contractual terms imposed on Oct. 1 together with other practices are irreparably damaging the European cloud computing ecosystem.

Amazon is the market leader in the cloud computing sector, followed by Microsoft and Alphabet unit Google.

"Leveraging its dominance in productivity software, Microsoft restricts choice and inflates costs as European customers look to move to the cloud, thus distorting Europe's digital economy," CISPE secretary general Francisco Mingorance said in a statement.

The company uses its dominance in productivity software to direct European customers to its Azure cloud infrastructure to the disadvantage of European rivals, CISPE alleged in its complaint to the European Commission.

It alleged that Microsoft's anti-competitive practices included discriminatory bundling and tying of its products, self-preference pricing and locking in customers both on the technical and competitive level.

Microsoft, which has been fined more than 1.6 billion euros ($1.6 billion) by the Commission in the previous decade for various antitrust violations, said it is committed to addressing valid licensing concerns and supporting a competitive environment.

"The licensing changes we introduced in October give customers and cloud providers around the world even more options for running and offering our software in the cloud," a spokesperson said.

Cloud service providers in Germany, Italy, Denmark and France, two of whom are members of CISPE, have filed similar complaints with the Commission in the past couple of years.

Microsoft subsequently amended licensing deals and other changes to make it easier for cloud service providers to compete starting Oct. 1 in a bid to stave off EU antitrust concerns.

Rivals, Alphabet's Google, Alibaba and Microsoft's own cloud services however are excluded from the changes.

CISPE said the EU competition watchdog should tackle the issue by applying the trade body's principles of fair software licensing devised last year to Microsoft.

It said an independent European Observatory could be set up to audit dominant software companies' licensing terms.

The Commission could also add another provision to newly adopted tech rules, known as the Digital Markets Act, prohibiting cloud computing gatekeepers from favouring their software applications, CISPE said.

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