Microsoft Cloud Practices Under Investigation

Microsoft has been able to avoid an EU investigation into its cloud licensing practices by settling with three EU rivals that filed antitrust complaints to the European Commission. But just as a settlement is being reached in the EU, Britain has launched its own investigation.

Complaints from French cloud computing services OVHcloud (OVH.PA), Italy’s Aruba Cloud, and the Danish Cloud Community against Microsoft allege that Microsoft’s cloud licensing practices make it difficult and expensive for users to opt for a competitor.

Microsoft has agreed to change certain policies and practices in response to the complaints for its anti-competitive practices, and an agreement looks imminent with the three European cloud computing companies. The European Commission, responsible for enforcing fair competition rules across the 27 member states, will monitor the settlement.

Cloud Infrastructure Services Providers in Europe (CISPE) is not part of the settlement. CISPE, who represents 24 cloud infrastructure providers including Amazon, also raised a complaint in October 2022.

Microsoft is also under new scrutiny in the UK. Ofcom, Britain’s media and communications regulator, kicked off an investigation in October to analyze the health of the cloud infrastructure services market. The regulator is strongly advising that the Competition and Markets Authority investigate the UK cloud market.

Ofcom has determined that Microsoft and Amazon have 60-70% of the total market share and the current market practices require further study. “High fees for transferring data out, committed spend discounts and technical restrictions” increase the cost of change and limit the viability of using multiple providers, thereby reducing customer choice and healthy competition.

In May 2022, Microsoft President Brad Smith issued a statement on the corrective actions it was taking to respond to the complaints that had been submitted at the time, including the introduction of five European Cloud Principles designed to “guide all aspects of [Microsoft’s] cloud business, enhance transparency for the public, and help [Microsoft] to better support Europe’s technology needs.” The changes took effect in October 2022.

“As a major technology provider, we recognize our responsibility to support a healthy competitive environment and the role that trusted local providers play in meeting customers’ technology needs,” Smith said.