Google urges UK antitrust intervention against Microsoft's cloud dominance

01 Dec 2023

Google urges UK antitrust intervention against Microsoft's cloud dominance

Google has formally called upon the UK's antitrust regulator, the Competition and Markets Authority (CMA), to intervene and take action against Microsoft. The tech giant alleges that Microsoft's business practices have placed its competitors at a significant disadvantage.

Tech giants such as Microsoft and Amazon, who have become significant players in the cloud computing industry, have come under growing criticism worldwide. Regulators in the UK, the European Union, and the United States are actively investigating the market power wielded by these industry giants.

The CMA initiated an investigation into the UK's cloud computing sector in October 2023, prompted by a referral from the media regulator, the Office of Communications, or Ofcom. The referral highlighted the substantial dominance of Amazon and Microsoft in the market. Amazon Web Services, also known as AWS, and Microsoft's Azure jointly held a commanding 70–80% share of Britain's public cloud infrastructure services market in 2022, according to Ofcom, with Google's cloud division trailing as their closest competitor at approximately 5–10%.

In the letter submitted to the CMA, Google argued that Microsoft's licensing practices unjustly discouraged customers from utilizing services offered by competitors, even as a secondary option alongside Azure. Google contended that customers were essentially left with no economically reasonable alternative but to opt for Azure, despite potentially preferring the prices, quality, security, innovations, and features of rival services.

The alleged licensing restrictions imposed by Microsoft were identified by Google as the primary impediment to competition within the UK's cloud computing market. Despite Microsoft's efforts to address concerns and promote competition through updates to its licensing rules, Google and other rivals remain dissatisfied.

A Microsoft spokesperson responded, emphasizing the company's collaboration with independent cloud providers to address concerns and provide opportunities. The spokesperson highlighted that more than 100 worldwide cloud providers had taken advantage of the changes. The spokesperson also cited independent data, indicating healthy competition between Microsoft and Google in the second quarter of 2023, with both making modest gains on the dominant AWS.

Google Cloud Vice President Amit Zavery criticized Microsoft's practices and reiterated Google's commitment to a multi-cloud approach. Zavery emphasized the importance of allowing customers to easily move between providers based on their specific needs, fostering innovation, and preventing a reduction in cloud providers.

The core issue at hand revolves around Microsoft's decision to update terms for customers wanting to use their Windows or other software licenses in the cloud. This update effectively results in higher costs for customers choosing Google or AWS over Microsoft's Azure.

Google has put forth six recommendations to the CMA, including measures to improve interoperability for customers using Azure alongside other cloud services and prohibiting Microsoft from withholding security updates for those making the switch.

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