Google Accuses Microsoft of Strangling Cloud Competition: A New Antitrust Battle Unfolds
Google has filed a new complaint about Microsoft with the European Commission on antitrust grounds. The new complaint, reportedly made on September 25, 2024, revives concerns of major cloud providers, especially Microsoft, alleged to limit European businesses’ options for free change of cloud service providers. Saying it was worried, Google in a detailed press release noted that Microsoft is taking advantage of its market dominance over the cloud to bind customers into its Azure platform.
It is also at a very crucial time as the role of the European cloud market is being increasingly taken by three of the big players: AWS, Microsoft Azure, and Google Cloud. They account for about 72% of the market, which gives everybody a reason to cull panic over certain monopolistic behavior and reduced competition for the smaller cloud service providers.
Anti-Competitive Practices by Microsoft
Google’s most serious charge is that Microsoft has been engaging in licensing anti-competitive practices in its contracts for cloud computing. According to Google, it makes customers across Europe more difficult to switch their data and workloads into a competing cloud service through such contracts. According to Google, only Microsoft is resorting to such stringent tactics; it is an overt play to monopolize the market.
That echoes a rallying cry in November 2022 by the Cloud Infrastructure Service Providers in Europe or CISPE, an industry association that speaks for cloud services companies such as Amazon’s AWS and Italy’s Aruba. CISPE had filed a complaint close to the one by Google with the European Commission. It accepted Microsoft’s commitment to effect remedies ordered to remedy within nine months as a resolution of the case in July 2024.
Despite this settlement, Google claims that Microsoft still fails to modify its practices in cloud licensing. According to a press release by Google, “Rather than changing its practices, Microsoft has entered into one-off agreements with a handful of companies.” This would suggest that the settlement reached with CISPE still is not strong enough in terms of how much to suppress the industry’s angst.
Earlier Antitrust Settlements That Occurred
The CISPE complaint from 2022 marks a milestone in the panorama of cloud regulation within the EU. Given that the EC had already scrutinized the complaint and engaged with Microsoft, it eventually settled on a few remedies to the action to ensure fair play in the cloud market. One such remedy was that of making Microsoft pay for the litigation and campaign costs of CISPE.
But the new complaint by Google seems to convey a message that perhaps those measures weren’t enough. Instead of putting an end to the bigger issue of dominance and anti-competitive behavior by Microsoft, the settlement has been more of an inducement for dissatisfaction within the industry circles: Google finds its way out to the forefront to speak on behalf of its cloud customers in Europe.
In one instance, Google claims to have paid CISPE what could be construed as a king’s ransom—€470 million—in order to get out of the settlement. That is testament to the level of competition between the two cloud giants.
Microsoft hasn’t been taking the allegations by Google lightly, though. Talking to Euractiv, a spokesperson for Microsoft called the complaint an effort by Google to gain leverage in the European market. “Having failed to persuade European companies, we expect Google similarly will fail to persuade the European Commission,” the spokesperson said, in reference to the earlier CISPE settlement.
The spokesperson commented that almost all the matters that have led to a settlement with CISPE have been addressed, so in many ways, it’s the first impression that Google’s complaint is more of a strategic play than a matter of genuine concern. However, the new complaint shone a spotlight on how effective are the remedies agreed to by Microsoft back in July.
Broader Impact On The EU Cloud Market
This grievance suggests an even deeper issue in the Europe’s cloud space: a lack of competition. As per France’s largest cloud provider, OVHcloud, in the European Union, Amazon Web Services, Microsoft Azure, and Google Cloud together hold about three-quarters of the market. Such dominantly consolidated market share has thrown a very pertinent question whether small cloud players could survive in an industry so concentratedly controlled by few players.
Industry leadership has also been heard, such as by Daniel Friedlaender of CCIA Europe. He pointed out that many European businesses face the problems of additional software license purchases in cases where they want to switch to another cloud provider. That, in turn, severely hampers the full use of one of the core benefits of cloud computing: if firms are unable to take full advantage of these benefits, then is the basic promise of cloud computing really meaningful?.
For instance, Google’s complaint illustrates a bid to “give voice” to the frustrations they have heard from their customers. Its decision to go to court might also have something to do with its own fight against antitrust authorities within the EU. Indeed, Google has been a defendant in several antitrust cases over the years and has navigated EU regulatory processes.
What’s Next for Cloud Competition in Europe?
This case also exemplifies the growing awareness of regulators and institutions about taking measures for promoting competition. The European Commission accepted Google’s complaint and stated its commitment to review the matter according to standard procedures. In this regard, taking into account the fact that this is the second case so far in which the Commission got involved in the regulation of a segment of the cloud market, this might lead to a re-questioning of how better regulation of cloud services would be created so as to reach a level playing field for all providers.
With the ever-increasing momentum of the cloud computing market, fair competition, for one, cannot be overemphasized. Whether serious changes would really come from Google’s complaint against Microsoft remains too early to say; however, it already highlighted some of the challenges before the European cloud market in the long run. With a few powerful players in the field, regulatory oversight becomes clearer than ever.
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