Microsoft has agreed to settle an antitrust complaint with the European cloud services organisation CISPE. The deal will see the big tech firm pay out €20m in exchange for the trade body withdrawing its complaint to the European Commission, which claimed that Microsoft manipulated licensing agreements for its software to prevent its cloud computing customers from switching to other providers. It will also reset the pricing of its software and remunerate CISPE’s 27 members for revenues lost because of the big tech firm’s conduct – with the exception of AWS, AliCloud and Google Cloud.
The agreement will likely forestall an EU antitrust investigation and any potential financial penalties that arise from such a probe. Microsoft’s president and vice-chair Brad Smith applauded the deal. “After working with CISPE and its European members for more than a year, I am pleased that we’ve not only resolved their concerns of the past,” said Smith, “but also worked together to define a path forward that brings even more competition to the cloud computing market in Europe and beyond.”
CISPE in a two-year battle with Microsoft
CISPE’s complaint about Microsoft’s conduct dates to 2022, when it claimed the company was imposing unfair licensing conditions on its members. The trade body – which includes AWS as well as smaller European cloud providers among its number – had also complained publicly, including to this publication, about other alleged anti-competitive activities of Microsoft’s in the cloud market, including self-preferencing and manipulative pricing arrangements.
“These practices further lock the customer into a relationship with the provider, both contractually and technically, when it comes to portability and switching costs,” CISPE’s chairman, Francisco Mingorance, told Tech Monitor. “They face a situation where any switching of provider infrastructure, or even the software, is prohibitive cost-wise.”
Microsoft has consistently denied that it engages in anti-competitive behaviour in the European cloud market. “We remain committed to addressing valid licensing concerns,” a company spokesperson said in response to CISPE’s original complaint, adding that the firm supported “a competitive environment where all [cloud] providers can thrive.”
Deal castigated by UK cloud experts
CISPE welcomed Microsoft’s settlement. “This agreement,” said Mingorance, “will provide a level playing field for European cloud infrastructure service providers and their customers.”
The reaction from UK cloud providers was more mixed. Former UKCloud chief executive Simon Hansford said that the deal raised concerns about a lack of transparency for the broader cloud market, and served as an example to the Competition and Markets Authority for how not to correct market inequities in the wake of its investigation into the UK cloud market. For his part, Civo chief executive Mark Boost told Tech Monitor that the agreement did little to diminish the dominance of the three main hyperscaler providers in the global cloud market.
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“By making a deal with Microsoft that looks to be exclusive to CISPE members,” said Boost, these firms “will receive some short-term benefits, but the cloud industry and their customers will pay the price in the long term. However they position it, we cannot shy away from what this deal appears to be: a global, powerful company paying for the silence of a trade body and avoiding having to make fundamental changes to their software licensing practices on a global basis.”
