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March 30, 2023

Google criticises Microsoft’s ‘anti-competitive’ cloud behaviour in Europe

Complaints about Microsoft by smaller cloud providers are set to be resolved, but the hyperscalers are still perturbed.

By Matthew Gooding

A Google executive has criticised Microsoft’s cloud practices as “anti-competitive”. Amit Zavery, senior vice president at Google Cloud, made his comments as a long-running dispute between Microsoft and European cloud providers is set to be resolved.

Google Cloud competes with Microsoft Azure and AWS in the public cloud market. (Photo by Tada Images/Shutterstock)

As reported by Tech Monitor, Microsoft has been at loggerheads with European rivals since last year when they made a complaint against the tech giant over claims the licensing terms for its Azure cloud platform and other enterprise products were anti-competitive. A deal has reportedly been agreed that will see MSFT change the way it sells these packages in Europe, though no official announcement has been made.

If agreed, the deal would stave off the threat of a European Union investigation. If an antitrust ruling was made against the company, it could face a fine of over one billion dollars.

Is Microsoft anti-competitive in the cloud?

Microsoft first made controversial revisions to its terms and conditions in 2019, which meant customers using Office 365 and its other productivity tools had to purchase an additional license to run them on a third-party cloud provider.

This was designed as a move to try and convince customers to switch over to Azure from its two biggest rivals in the public cloud market – Amazon’s AWS and Google Cloud – but the charge also applied to all other European cloud providers too, which are already struggling to make in-roads against their US rivals.

Following the complaint from a group of companies represented by cloud trade association CISPE, Microsoft said it would change its terms so the additional license only applied to AWS, Google Cloud and Alibaba’s cloud service. And following further talks with the European companies, it is thought a deal has been agreed.

Tech Monitor has approached Microsoft for comment. Speaking last year following meetings with European cloud providers, MSFT’s president Brad Smith said: “We recognise that it is important to support a competitive environment in the European cloud provider market, in which smaller competitors have the opportunity to thrive.”

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Google Cloud and AWS oppose Microsoft cloud licensing in Europe

However, it is not to the liking of Google Cloud. “Microsoft definitely has a very anti-competitive posture in cloud,” Zavery said in an interview with Reuters. “They are leveraging a lot of their dominance in the on-premise business as well as Office 365 and Windows to tie Azure and the rest of cloud services and make it hard for customers to have a choice.

“When we talk to a lot of our customers, they find a lot of these bundling practices, as well as the way they create pricing and licensing restrictions, make it difficult for them to choose other providers.”

Microsoft is the second-biggest player in the public cloud market, behind AWS but ahead of Google Cloud. And while there are many European providers available, most companies on the continent rely on one of the three US hyperscalers.

This is not the first time Google Cloud’s senior team has voiced its opposition to Microsoft’s behaviour. In August last year, the company’s vice president for public affairs and policy, Marcus Jadotte, wrote on Twitter: “Customers should be able to move freely across platforms and choose the technology that works best for them, rather than what works best for Microsoft.” He added that cloud providers should “compete on the merits of their technologies”.

An AWS spokesperson said at the time: “Microsoft is now doubling-down on the same harmful practices by implementing even more restrictions in an unfair attempt to limit the competition it faces – rather than listening to its customers and restoring fair software licensing in the cloud for everyone.”

Read more: Alibaba’s six-way split sees cloud division become a separate company

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