Google Files Complaint Against Microsoft for Anti-Competitive Practices

By Philip Blenkinsop

BRUSSELS (Reuters) – Alphabet unit Google (NASDAQ: GOOGL) filed a complaint with the European Commission on Wednesday, alleging that Microsoft (NASDAQ: MSFT) engages in anti-competitive practices to lock customers into its cloud platform, Azure.

Google, a major competitor to Microsoft and Amazon (NASDAQ: AMZN) Web Services, contends that Microsoft exploits its dominant Windows Server operating system to stifle competition.

Google Cloud Vice President Amit Zavery stated at a briefing that Microsoft imposes a 400% mark-up on customers who wish to run Windows Server on rival cloud platforms, while those using Azure face no such charges. Additionally, users of competitor cloud systems reportedly receive later and less comprehensive security updates.

A 2023 study by the cloud services organization CISPE revealed that European businesses and public sector entities incur costs of up to 1 billion euros ($1.12 billion) annually due to Microsoft’s licensing penalties.

In July, Microsoft settled a 20-million-euro antitrust complaint regarding its cloud computing licensing policies with CISPE, thus avoiding an EU investigation. However, this settlement did not address concerns raised by Amazon Web Services, Google Cloud Platform, and AliCloud, leading to criticism from these companies.

Microsoft contended that it had amicably resolved similar concerns from European cloud providers and suggested that Google had hoped for continued litigation. “Having failed to persuade European companies, we expect Google similarly will fail to persuade the European Commission,” a Microsoft spokesperson remarked.

Google also accused Microsoft of forcing customers to use its collaboration application, Teams, even when they preferred alternatives, and claimed that Microsoft is adopting the same tactics with Azure.

Zavery asserted, “The time to act is now. The cloud market will become increasingly restrictive if there is no intervention.” He urged regulatory action to dismantle Microsoft’s “vendor lock” and create a fair competitive landscape.

In the complaint, Google noted that Microsoft’s Windows Server and its other products have a market share exceeding 70% among European enterprises.

For years, Microsoft permitted its products to be used on any hardware, including laptops, but introduced restrictions in 2019 as it expanded into the cloud sector.

The cloud computing market is growing at approximately 20% annually in the EU, highlighting significant potential. An April McKinsey study found that two-thirds of EU companies have less than half of their workloads in the cloud.

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