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Trade Group Accuses Microsoft Of Antitrust Behavior In Europe

Dev Kundaliya

A trade group representing European cloud providers, including AWS, alleges in an antitrust complaint that the market is being irrevocably harmed by Microsoft’s new contractual conditions.

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A trade group representing 24 cloud computing providers in Europe has filed an antitrust complaint with the European Commission’s Directorate-General (DG) over Microsoft’s licensing of software in the cloud.

CISPE, or Cloud Infrastructure Service Providers in Europe, which has filed the complaint, comprises some of Microsoft’s most fierce competitors in the cloud hosting industry, including Amazon Web Services (AWS).

Nearly three-quarters (72 percent) of the European corporate cloud storage market is now controlled by AWS, Microsoft, and Google, while local players’ market share has decreased from 27 percent to only 13 percent, according to Synergy Research Group.

Globally, AWS, Microsoft and Google combined for a 66 percent share of the $57.5 billion in cloud services spending in the third quarter of 2022, Synergy Research Group reported.

Francisco Mingorance, the secretary general of CISPE, said in a statement that Microsoft leverages its dominant position in productivity software in a manner that limits choice and raises prices as European clients look to shift to the cloud, thus distorting Europe’s digital economy.

[Related: AWS Vs. Microsoft Vs. Google Cloud Q3 2022 Earnings Face-Off]

According to CISPE, the European cloud computing ecosystem is being irrevocably harmed by Microsoft’s new contractual conditions, which went into effect on Oct. 1, and by other practices.

It alleges that Microsoft is driving European customers to its Azure cloud infrastructure at the expense of its competitors in Europe by abusing its dominance in productivity software.

The complaint, filed Nov. 9, alleges Microsoft’s anti-competitive behavior includes discriminatory product bundling, self-preference pricing and customer lock-in on both a technical and competitive level.
Microsoft told Reuters 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, according to Reuters.

Member Companies Have Filed Complaints Against Microsoft Before

The new complaint follows a separate filing from CISPE members OVHcloud and Aruba, both of which alleged that Microsoft’s actions are anti-competitive.

That complaint focused on Microsoft’s licencing operations. It alleged that Microsoft had made it more expensive for users to move from Azure to another cloud service offered by rival firms. It also claimed that Microsoft’s software does not perform as well when used on their platforms, making it difficult for other cloud providers to compete with Microsoft.

OVHcloud said that by exploiting its dominant position in the cloud computing services industry, Microsoft had been undermining fair competition and limiting consumer choice.

Microsoft said at the time that cloud providers have a lot of alternatives when it comes to providing cloud services to their clients using Microsoft software, whether bought by the customer or the partner.

In an effort to allay EU antitrust concerns, Microsoft later modified its licence agreements and made some changes to make it simpler for cloud service providers to compete, beginning October 1st.

Through the new complaint, CISPE is now looking for remedies from the European Commission that will benefit European providers and clients of cloud infrastructure services.

“We have filed this sector complaint to rectify the harms suffered by vendors and customers alike as a result of unfair software licencing practices,” said Mingorance in the statement.

The trade group now expects DG to act immediately, issue a Statement of Objections, and open a formal case against Microsoft in order “to defend the robust cloud ecosystem Europe needs and deserves,” CISPE added.

“These matters are critical to the survival of a competitive market for cloud infrastructure in Europe,” according to the CISPE statement.

This article originally appeared on CRN’s sister site, Computing.

 

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