European Commission scrutinizes Microsoft’s cloud practices • The Register
The European Commission is beginning to gently investigate allegations against Microsoft of anti-competitive practices in the cloud computing industry regarding the company’s licensing rules.
A questionnaire seen by newswires Bloomberg and Reuters was sent out last month and follows multiple complaints from local providers, including OVHcloud and NextCloud, against Redmond-based public cloud giant Azure.
“We can indeed confirm that the commission has received the complaint,” the EC reiterated in a statement.
Points of interest include whether Microsoft is making it harder or more expensive for small cloud companies to run some of the programs, including Windows and Office on competing clouds or whether “technical adjustments” are needed. Respondents were also asked if they felt it was necessary to integrate Microsoft products or services into their own service infrastructure “in order to be more competitive.”
The EC is interested in how the licensing terms that customers of on-premises cloud providers receive from Microsoft compare to those that Microsoft itself sells to its own customers, under the Azure Hybrid Benefit program. This gives customers a discounted incentive to run, for example, Windows Server in Azure rather than a competitor’s cloud infrastructure.
The complaints against Microsoft are piling up: NextCloud launched one against Microsoft in November for the bundling of Windows with online services.
“It’s quite similar to what Microsoft did when it killed competition in the browser market, halting almost all browser innovation for over a decade,” said Frank Karlitschek, CEO and Founder of Nextcloud GmbH. in a press release last November.
France-based OVHcloud filed an EC complaint against Microsoft in the summer of 2021, though it was only made public last month because a very complex Commission process means it doesn’t There is no public acknowledgment of the case until months after it was filed. Interestingly, only the plaintiff(s) filing such a complaint and the defendant (who is not even informed of the identity of the plaintiff(s) until quite late in the process) are aware of this while the commission collects information.
An OVH spokesperson said of the November 2021 Microsoft complaint:
“We confirm that several companies, including OVHcloud, are taking steps to ensure a level playing field between cloud service providers operating in the European Digital Single Market, by filing a complaint with the European Commission’s DG Competition against Microsoft. According to the plaintiffs, by abusing its dominant position, Microsoft is undermining fair competition and limiting consumer choice in the market for cloud computing services.”
It is still very early in the procedure and there is no guarantee that the EC will launch a formal investigation. The noises made by the European Union’s antitrust chief, Margarethe Vestager, could be music to Microsoft’s ears.
Last week, she told Reuters that “so far we have had no concerns” about big big tech abusing its dominance in the cloud. Additionally, Vestager expects the Gaia-X initiative – creating a sovereign European cloud infrastructure – to help balance the balance by giving customers more choice.
The problem is that not all local cloud players are themselves convinced by Gaia-x. Scaleway, for example, gave up saying, “The Association’s goals, while initially laudable, are hijacked and slowed down by a paradox of polarization that reinforces the status quo, i.e. a playing field imbalance.”
In February, the European Cloud Industrial Alliance wrote an open letter lamenting the state of digital sovereignty in the region, saying the EU was “rolling out the red carpet to non-European players who repeatedly abused their dominant position “.
As for Microsoft, it reused the same drawer statement it sent us last month when OVHcloud’s complaint came to light.
“The cloud market is growing and European cloud providers have built successful business models using Microsoft software and services. Cloud providers have many options for delivering cloud services to their customers using of Microsoft software, whether purchased by the customer or the partner. We are constantly evaluating how we can best support our partners and make Microsoft software available to customers in all environments, including those of other cloud providers.”
The global cloud infrastructure market grew 34% year-over-year in the fourth calendar quarter to $53.5 billion, up a staggering $13.6 billion. AWS was by far the market leader in terms of revenue, followed by Microsoft which itself is well ahead of Google Cloud. In Europe, OVH is the fourth player, but it is far behind the three. ®