Microsoft Faces Legal Action in Britain

LONDON (Reuters) – Microsoft (NASDAQ:MSFT) is facing legal action in Britain due to claims that thousands of businesses using cloud computing services provided by Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOGL), and Alibaba (NYSE:BABA) may be paying higher license fees for Windows Server software.

Competition lawyer Maria Luisa Stasi filed a case at the Competition Appeal Tribunal on Tuesday, alleging that British businesses and organizations could collectively be owed more than £1 billion ($1.27 billion) in compensation.

"Put simply, Microsoft is punishing UK businesses and organizations for using Google, Amazon, and Alibaba for cloud computing by forcing them to pay more money for Windows Server," she stated.

"By doing so, Microsoft is trying to force customers into using its cloud computing service Azure and restricting competition in the sector."

Separately, Britain's competition regulator is investigating the cloud computing market, which is dominated by Amazon's AWS, Microsoft's Azure, and, to a lesser extent, Google Cloud Platform.

Microsoft's licensing practices, particularly regarding Windows Server and Microsoft 365 products, are part of this inquiry, with an update expected imminently.

In 2020, Microsoft introduced new license fees for running its software on major cloud providers, allegedly using the fees to incentivize customers to use its Azure platform. Data from the Competition and Markets Authority, published in May, indicated that Microsoft was acquiring customers at a significantly higher rate than other cloud providers following the licensing change.

Last week, the United States Federal Trade Commission (FTC) initiated a broad antitrust investigation into Microsoft, including its cloud computing business, amidst allegations that the software giant was abusing its market power in productivity software through punitive licensing terms designed to prevent customers from transitioning from Azure to competitive platforms.

($1 = 0.7891 pounds)