Microsoft is being sued for over £1 billion ($1.27 billion) in the U.K., accused of exploiting its dominance in cloud-based server software to overcharge customers who use rival cloud platforms like Amazon Web Services (AWS), Google Cloud, and Alibaba Cloud.
The lawsuit, filed by competition lawyer Maria Luisa Stasi, alleges Microsoft’s licensing practices unfairly penalize businesses that choose competitors’ cloud services over its Azure platform. By offering lower prices to firms using Azure for Windows Server software, Microsoft is accused of restricting competition and pressuring customers to migrate to its cloud services.
Core Allegations and Claims
The lawsuit claims businesses running Windows Server software on competitors’ platforms are charged significantly higher fees compared to those using Azure, effectively forcing customers to pay a premium for not using Microsoft’s infrastructure.
Stasi, who is head of law and policy at the digital rights group Article19, described the practices as “anti-competitive,” saying:
“Microsoft is punishing U.K. businesses and organisations for using Google, Amazon and Alibaba for cloud computing by forcing them to pay more money for Windows Server. This lawsuit aims to challenge Microsoft’s anti-competitive behavior and return the money to organizations that have been unfairly overcharged.”
Thousands of U.K. businesses and organizations are included in the case under a collective “opt-out” action, which automatically includes all affected firms unless they choose not to participate.
Broader Context of Competition Concerns
The lawsuit comes as the U.K.’s Competition and Markets Authority (CMA) is nearing a decision on its investigation into anti-competitive practices in the cloud computing industry. The CMA is expected to propose “behavioral remedies” to address concerns, with its final decision due by late 2024.
The CMA’s probe follows growing scrutiny of Microsoft’s cloud business practices across Europe. Earlier this year, Microsoft settled a €20 million ($21 million) complaint with CISPE, a cloud trade group, agreeing to level the playing field for smaller cloud providers. However, Google filed a fresh antitrust complaint in September, alleging Microsoft’s licensing terms lock businesses into Azure and limit market competition.
Impact on the Cloud Market
The European cloud computing sector has seen a decline in local providers’ market share, falling from 27% in 2017 to 13% in 2022 as major U.S. hyperscalers like Microsoft, Amazon, and Google consolidate their dominance. According to Solange Viegas Dos Reis, Chief Legal Officer at OVHCloud, the integration of software and infrastructure by hyperscalers exacerbates the issue, making it harder for customers to switch platforms.
OVHCloud itself settled an antitrust complaint with Microsoft in July, dropping its case after reaching a deal that addressed its concerns.
Implications for Microsoft and the Industry
The lawsuit represents another challenge for Microsoft, which has faced increasing regulatory and legal scrutiny over its cloud practices globally. If the suit succeeds, it could result in significant payouts for affected U.K. businesses and force the tech giant to adjust its pricing and licensing policies.
The case also highlights the growing tension between hyperscalers and regulators as the cloud market expands, raising broader questions about competition, innovation, and fairness in the tech industry.
