Microsoft could face antitrust ‘liaison’ charges amid customer complaints over cloud contracts

Microsoft has apparently dodged the traditional antitrust scrutiny that pursues tech companies with similar roots such as Google, Amazon and Facebook; but that could end soon as the volume of customer complaints about a contract change in 2019 increases.

According to a Bloomberg report, current Microsoft customers are concerned about how the company manages licensing of its products to interact with competing platforms.

In 2019, Microsoft took the overwhelming decision to overhaul the licenses of its famous Windows and Office platforms which increased the price across the board for customers, but it has now become clear that this decision was arguably a screen of smoke to inject “discounts” for existing customers who continue to use the Azure platform rather than competitors.

Rather than simply raising the price for customers who choose to use Microsoft platforms alongside competing services, which would likely be considered a direct anti-competitive measure, the company raised the price of all of its products while offering those who unilaterally use its services greater discounts as financial compensation. incentives to increase its market share in the cloud.

Unfortunately for Microsoft, some customers are starting to make the connection and are asking European regulators to investigate the matter.

“The droppings are about to hit the fan,” said Wes Miller, an analyst at Directions on Microsoft, a research firm that advises customers on Microsoft licensing. He said running the company’s software on a competing cloud service is “much more expensive than before, and more expensive than it costs you to do the same thing on Azure.”

Other stories forwarded to Bloomberg include:

A person familiar with the company said it started using AWS when it started deploying mobile devices for its employees. The company successfully used its Amazon and Windows combination for several years, until the changes at the end of 2019. The conflict erupted more recently, when the company began to renew its contracts with Microsoft to continue using Windows on devices. virtual desktops through Amazon’s cloud, the customer is required to purchase a license that was previously included, adding millions of dollars to the total cost.

The company sees this as a penalty, the person familiar said, because Azure customers get this additional license for free. The customer is not allowed to run Office software through a competing cloud without violating their license terms with Microsoft, the person said. The company spent months negotiating with Microsoft over the issue, eventually getting a multi-year reprieve. After this expiration, this client will again be non-compliant.

Anecdotal cases alone may not be enough to warrant the wrath of the dreaded antitrust microscope, but given Microsoft’s past as well as the entire market, the company could be accused of a “binding” antitrust violation.

As defined by the Federal Trade Commission:

For competitive purposes, a monopolist may use forced buying or “tying” selling to obtain sales in other markets where it is not dominant and make it more difficult for rivals in those markets to obtain Sales. This can limit consumer choice for shoppers who wish to purchase one product (“tying”) by forcing them to also purchase a second product (“tying”). Typically, the “tied” product may be a less desirable product that the buyer might not buy unless they have to, or may prefer to get it from another seller. If the seller offering the tied products has sufficient market power in the “tying” product, these arrangements may violate antitrust laws.

According to customers and competitors such as Amazon and Google, Microsoft is unaware of the request to fix the issue because all parties filed complaints directly.

Microsoft President and Vice President Brad Smith acknowledged some of the concerns and issued the following statement: “There are certainly valid concerns, it’s very important for us to learn more and then bring some changes”.

Microsoft could face antitrust "to attach" fees amid customer complaints over cloud contracts - - 12 April 2022

Although Microsoft hasn’t officially made any changes to its 2019 licensing overhaul, the company has also acknowledged that competing platforms may in fact offer their own discounts to win over seemingly unhappy and dissatisfied customers, an argument that is sure to used if the company is transported. in court about it.

As customers and rival platforms await a response to their complaints from Microsoft or regulators, competitors such as Amazon face their own scrutiny as the House Judiciary Committee acts on its report of 2020 targeting AWS titled Survey on competition in digital markets.

Similar to Microsoft, AWS could find itself defending its more straightforward self-preference that requires customers of EC2 or S3 licenses for storage products to also use higher-tier AWS data management services, or as the FTC calls it practice of “linked” products. .

Ultimately, Microsoft, AWS, Google, IBM and others will all come under greater scrutiny as the jockey for customer acquisition and retention in a shrinking pool. At this point, antitrust violations may be less a matter of “if” and more of “when,” depending on how aggressive each platform provider is.

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