The European Commission is cautiously beginning to investigate allegations against Microsoft of anticompetitive practices in the cloud computing industry related to the company’s licensing rules.
A questionnaire seen by news outlets Bloomberg and Reuters was sent out last month and follows multiple complaints from local providers, including OVHcloud and NextCloud, against the Redmond-based Azure public cloud giant.
“We can indeed confirm that the commission has received the complaint,” the EC reiterated in a statement.
Areas to consider include whether Microsoft is making it more challenging or more expensive for smaller cloud companies to run some programs, including Windows and Office, on competing clouds, or whether “technical tweaks” are needed. Respondents were also asked whether they feel it is necessary to include Microsoft products or services in their own infrastructure service “in order to compete more effectively”.
The EC is interested in how the license terms that customers receive from Microsoft’s local cloud providers compare to the terms that Microsoft itself sells to its own customers under the Azure Hybrid Benefit program. This gives customers a discount incentive to, for example, run Windows Server in Azure instead of a competitor’s cloud infrastructure.
The complaints against Microsoft are piling up: NextCloud fired one against Microsoft in November for bundling Windows with online services.
“This is similar to what Microsoft did when it killed competition in the browser market and halted almost all browser innovation for more than a decade,” Frank Karlitschek, CEO and founder of Nextcloud GmbH, said in a statement last November.
France-based OVHcloud filed a complaint with the EC against Microsoft in the summer of 2021, although it was only made public last month, as a highly involved process by the Commission means there will be no public recognition until months after the case was filed. of the matter. Interestingly, only the claimant(s) making such a complaint and the defendant (who is not disclosed the identity of the claimant(s) until quite late in the trial) are aware of this as the committee is collecting information.
An OVH spokesperson said of the November 2021 Microsoft complaint:
“We confirm that several companies, including OVHcloud, are taking action to ensure a level playing field between cloud service providers operating in the European Digital Single Market, by filing a complaint with the European Commission’s DG Competition against Microsoft. According to the plaintiffs , through abuse Microsoft’s dominant position undermines fair competition and limits consumer choice in the cloud computing services market.”
This is still very early in the proceedings and there is no guarantee that the EC will launch a formal investigation. The noises made by the European Union’s antitrust chief Margarethe Vestager may be music to Microsoft’s ears.
Last week, she told Reuters that “so far we have not been concerned” that major tech companies are abusing their dominance in the cloud. Furthermore, Vestager expects the Gaia-X initiative – the creation of a sovereign European cloud infrastructure – will help strike a balance by giving customers more choice.
The problem is that not all local cloud players themselves are convinced of Gaia-x. For example, Scaleway dropped out, saying, “The Association’s goals, while laudable at first, are sidetracked and retarded by a polarization paradox that reinforces the status quo, which is an unbalanced playing field.”
In February, the European Cloud Industrial Alliance wrote an open letter bemoaning the state of digital sovereignty in the region, saying that the EU was “rolling out the red carpet for non-EU players who have repeatedly abused their dominant position”.
As for Microsoft, it reused the same drawer statement it sent us last month when OVHcloud’s complaint came to light.
“The cloud market is growing and European cloud providers have built successful business models using Microsoft software and services. Cloud providers have many options to provide their customers with cloud services using Microsoft software, whether purchased by the customer or partner. evaluating how we can best support partners and make Microsoft software available to customers in all environments, including those of other cloud providers.”
The global cloud infrastructure market grew 34 percent year-over-year in the fourth quarter to $53.5 billion, up from a staggering $13.6 billion. AWS was by far the market leader in terms of revenue, followed by Microsoft, which itself is well ahead of Google Cloud. In Europe, OVH is the fourth largest player, but it lags far behind all three.