Google Calls on UK’s Antitrust Regulator to Act Against Microsoft
London – Google has urged Britain’s antitrust regulator to take action against Microsoft, alleging that its business practices have put competitors at a significant disadvantage. In a letter seen by Reuters, Google claims that Microsoft’s licensing restrictions have unfairly discouraged customers from using competitor services, hindering competition within Britain’s cloud computing market.
The call for action comes as both Microsoft and Amazon face increasing scrutiny globally for their dominance in the cloud computing industry. Regulatory bodies in Britain, the European Union, and the United States have initiated investigations into the market power of these tech giants.
The Competition and Markets Authority (CMA) launched an investigation into Britain’s cloud computing industry in response to a referral from media regulator Ofcom, which highlighted the market dominance of Amazon Web Services (AWS) and Microsoft’s Azure. According to Ofcom, in 2022, AWS and Azure held a combined market share of 70-80% in Britain’s public cloud infrastructure services market, with Google’s cloud division being their closest competitor at approximately 5-10%.
Google’s letter to the CMA argues that Microsoft’s licensing practices create barriers to competition by unfairly favoring Azure over rival services. The letter states, With Microsoft’s licensing restrictions in particular, UK customers are left with no economically reasonable alternative but to use Azure as their cloud services provider, even if they prefer the prices, quality, security, innovations, and features of rivals.
Google asserts that such practices directly harm customers and act as the main impediment to competition within Britain’s cloud computing market.
Responding to Google’s claims, Microsoft stated that it has already worked with independent cloud providers to address concerns and foster competition. The company emphasized that more than 100 global providers have taken advantage of the changes it implemented last year to its licensing rules.
The tech giant’s spokesperson added, As the latest independent data shows, competition between cloud hyperscalers remains healthy. In the second quarter of 2023, Microsoft and Google made equally small gains on AWS, which continues to remain the global market leader by a significant margin.
Google Cloud vice-president Amit Zavery criticized Microsoft’s practices and emphasized his company’s commitment to a multi-cloud approach, where customers can easily switch between providers based on their needs. Zavery stated, A lot of our software and cloud services interoperate and can run on AWS or on Azure as well, so you’re not restricted. If you don’t fix this, eventually you will have fewer cloud providers, and then innovation will not really happen, and investments will start shrinking.
The primary issue revolves around Microsoft’s decision to update its licensing terms for customers who want to use their Windows or other software licenses in the cloud. This effectively results in higher costs for customers if they choose Google or AWS instead of Microsoft’s Azure.
Regarding why Amazon does not pose a similar anticompetitive risk, Zavery noted that AWS consumers do not face the same restrictions. He stated, There are some issues, in terms of cloud interoperability, but we can fix that. That’s a discussion between providers, which is much understood, and customers are forcing that conversation. The problem we run into with Microsoft is that there’s no technical issue, but you have licensing restrictions which means we are now being prevented from competing.
In its letter to the CMA, Google made six recommendations, including the demand for Microsoft to enhance interoperability for customers using Azure in conjunction with other cloud services. Google also called for a ban on Microsoft withholding security updates from those who choose to switch providers.
The CMA has yet to respond to the call for action from Google.
In conclusion, Google’s call for the UK’s antitrust regulator to intervene against Microsoft highlights its concerns about licensing practices that it believes hinder competition within the cloud computing industry. The ongoing investigations conducted by various regulatory bodies worldwide emphasize the growing scrutiny towards Microsoft and Amazon’s dominance in this sector.
