Tech Giant Accused of Unfairly Overcharging Customers
A recent lawsuit accuses Microsoft of unfairly charging customers of rival cloud companies, seeking damages of over £1 billion ($1.27 billion). The lawsuit claims that customers using cloud services from Amazon Web Services (AWS), Google Cloud Platform, or Alibaba Cloud are forced to pay more to license Microsoft’s cloud-based Windows Server software on rival infrastructure.
Unfair Pricing Practices
Microsoft allegedly offers a cheaper price to firms running Windows Server on its own Azure cloud platform compared to direct competitors like AWS, Google’s cloud, or Alibaba Cloud. This pricing discrepancy is seen as a way to induce customers to switch to Azure, thereby restricting competition in the sector.
Competition Lawyer Takes Action
Maria Luisa Stasi, a competition lawyer and head of law and policy for digital rights advocacy group Article19, is leading the lawsuit. She argues that Microsoft is “punishing UK businesses and organisations for using Google, Amazon and Alibaba for cloud computing by forcing them to pay more money for Windows Server.” Stasi seeks to challenge Microsoft’s anti-competitive behavior and recover the money unfairly charged to organizations.
Thousands of British Businesses Affected
The lawsuit represents thousands of British businesses and organizations, making it an “opt-out” collective action. This means that any company potentially affected is automatically counted and can receive a payout if Microsoft loses.
Regulatory Scrutiny
The lawsuit comes as the UK’s Competition and Markets Authority prepares to address anti-competitive practices in the cloud industry. The CMA has set a deadline of November to December 2024 for its provisional decision. Earlier this year, Microsoft struck a 20 million euro ($21 million) settlement with cloud trade body CISPE and its members, ending an EU antitrust complaint accusing the tech giant of unfair software licensing practices.
Industry Concerns
Solange Viegas Dos Reis, chief legal officer of French cloud computing firm OVHCloud, notes that some cloud hyperscalers are essentially “selling together two products that should be totally separated” — widely-used software and cloud infrastructure. This practice raises concerns about the fairness of software licensing in cloud services.
Market Impact
From 2017 to 2022, European cloud firms’ market share halved from 27% to 13%, lagging international rivals as the entire European cloud market grew fivefold to 10.4 billion euros ($11 billion). The issue of software licensing in cloud services is a pressing concern that needs to be addressed to ensure fair competition in the industry.
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