Microsoft faces £1 billion lawsuit in UK for allegedly overcharging rival cloud companies' prospects

LONDON — Microsoft on Tuesday was accused of unfairly overcharging prospects of rival cloud firms in a lawsuit claiming damages of greater than £1 billion ($1.27 billion).

The lawsuit alleges prospects utilizing Amazon Net Companies (AWS), Google Cloud Platform or Alibaba Cloud — all key rivals to Microsoft’s Azure cloud — are pressured to pay extra to license the tech big’s cloud-based Home windows Server software program on rivals’ infrastructure.

Microsoft presents a less expensive value to companies working Home windows Server on Azure than on direct rivals like AWS, Google’s cloud or Alibaba Cloud. The lawsuit argues companies working the widely-used server software program are basically being overcharged to make use of various cloud computing options.

It provides Microsoft leverages its dominant market place in cloud-based server working techniques by extracting greater costs and inducing prospects into shifting to Azure. Claimant Maria Luisa Stasi, a contest lawyer, is in search of greater than £1 billion in compensation for companies affected.

Microsoft was not instantly obtainable for remark when contacted by CNBC.

“Put merely, Microsoft is punishing UK companies and organisations for utilizing Google, Amazon and Alibaba for cloud computing by forcing them to pay extra money for Home windows Server,” Stasi, who’s head of regulation and coverage for digital rights advocacy group Article19, stated in a press release shared with CNBC.

“By doing so, Microsoft is making an attempt to pressure prospects into utilizing its cloud computing service Azure and limiting competitors within the sector.”

She added the lawsuit “goals to problem Microsoft’s anti-competitive habits, push them to disclose precisely how a lot companies within the UK have been illegally penalized, and return the cash to organizations which have been unfairly overcharged.”

1000’s of British companies and organizations are represented within the lawsuit, which is an “opt-out” collective motion. That implies that any firm probably affected is routinely counted and may obtain a payout if Microsoft loses.

Stasi represents the shoppers of Amazon, Google and Alibaba however would not signify any of those companies, her spokesperson informed CNBC.

The event comes because the U.Ok.’s Competitors and Markets Authority is making ready “behavioral” treatments addressing anti-competitive practices within the cloud trade following a months-long probe, with two sources telling CNBC final month a provisional resolution might come as quickly as this week.

The CMA declined to touch upon the precise timing of its provisional resolution. Nevertheless, it is beforehand set a deadline of November to December 2024.

Earlier this 12 months, Microsoft struck a 20 million euro ($21 million) settlement with cloud commerce physique CISPE and its members ending an EU antitrust criticism accusing the tech big of unfair software program licensing practices at its cloud division.

The deal noticed Microsoft comply with cost companies the identical value for working its software program on smaller cloud firms’ techniques because it does by itself Azure platform.

However in September, Google filed a recent antitrust criticism in opposition to Google with the European Fee, the manager physique of the EU.

The go well with alleged that Microsoft’s software program licensing phrases successfully lock companies into its Azure platform and make it more durable to modify — and thus exerting management over the cloud market.

Solange Viegas Dos Reis, chief authorized officer of French cloud computing agency OVHCloud, informed CNBC some cloud hyperscalers are basically “promoting collectively two merchandise that must be completely separated” — widely-used software program and cloud infrastructure.

There’s additionally a difficulty of hyperscalers providing extra performance of their software program when it is working on their very own cloud providers than on third-party cloud providers, Dos Reis stated with out singling out any specific vendor.

From 2017 to 2022, European cloud companies’ market share halved from 27% to 13%, lagging worldwide rivals as all the European cloud market grew fivefold to 10.4 billion euros ($11 billion), in response to knowledge from Synergy Analysis Group.

The difficulty of software program licensing in cloud is one which’s not been assessed beforehand, Dos Reis informed CNBC in an interview final week, including OVH has “plenty of hope” with the CMA’s cloud competitors case.

OVHCloud agreed its personal settlement with Microsoft in July, which noticed it drop its personal EU antitrust criticism in opposition to the U.S. tech big.