Google files antitrust complaint against Microsoft over cloud practices

Google has lodged an antitrust complaint with the European Commission, accusing Microsoft of unfair licensing practices that stifle competition in the cloud computing market.

The complaint, filed on Wednesday, alleges that Microsoft exploits its dominance in operating systems and productivity software to lock customers into its Azure cloud platform, making it difficult and costly for them to switch to rival services.

At the heart of Google’s grievance is Microsoft’s licensing structure for products like Windows Server and Microsoft Office. According to Google, customers face steep financial penalties if they attempt to run these applications on competing cloud platforms.

Amit Zavery, vice president for Google Cloud, told reporters in Brussels: “If I already paid for these licenses, I should be able to use it where I choose to.” He added that a Microsoft customer moving Windows software to Azure “can do so essentially for nothing”, while doing the same with a competitor incurs a “400 per cent mark-up to buy new Windows server licenses”.

Google claims these practices have forced European businesses and public sector organisations to pay up to 1 billion euros annually in licensing penalties, citing a 2023 study by cloud services trade body CISPE.

The search giant, which ranks third globally in the cloud computing market behind Amazon Web Services and Microsoft Azure, is calling on EU regulators to compel Microsoft to remove restrictions on using cloud services from rivals.

“We believe this regulatory action is the only way to end Microsoft vendor lock-in and for customers to have a choice and create a level playing field for competitors,” Zavery stated.

Google also expressed concerns that Microsoft is degrading the user experience for customers moving Windows software to competing cloud providers, and accused the company of discriminatory practices by applying financial penalties only to Azure’s main rivals.

Microsoft has rebuffed the allegations, stating it expects the European Commission to dismiss Google’s complaint. A Microsoft spokesperson said: “Microsoft settled amicably similar concerns raised by European cloud providers, even after Google hoped they would keep litigating. Having failed to persuade European companies, we expect Google similarly will fail to persuade the European Commission.”

The complaint comes after Microsoft reached a multimillion-dollar settlement with a group of rival cloud providers in July, aiming to avoid a formal investigation in Brussels over its market dominance.

This move marks a rare escalation between major tech players in Brussels, reflecting the fierce competition in the rapidly growing cloud computing sector. A McKinsey study in April showed that two-thirds of EU companies had less than half of their workloads on the cloud, indicating significant growth potential in the market.

The European Commission has confirmed receipt of the complaint, stating it will assess it under standard procedures. If the complaint leads to a formal probe, it could take years to resolve.