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June 22, 2023

Google claims Microsoft and Oracle are ‘distorting’ public cloud market

Companies which provide on-premises and cloud solutions are potentially behaving anti-competitively, a US regulator has been told.

By Matthew Gooding

Google and other tech vendors have accused cloud providers, including Microsoft and Oracle, of uncompetitive behaviour in the public cloud market. The companies made their comments to the US Federal Trade Commission (FTC), which is considering competition and security issues in the sector. The FTC’s interest in the public cloud reflects a trend among regulators to investigate the rapidly growing market, which is currently dominated by a handful of hyperscale providers.

Microsoft ‘distorts’ the public cloud market, Google says. (Photo by Tada Images/Shutterstock)

The FTC put out its call for evidence in March, and it closed yesterday. It is “seeking public input on how the current market structure and business practices of cloud providers affect competition and data security,” according to its chair Linda Khan.

Microsoft and Oracle of ‘distorting’ cloud market says Google

Among those to respond to the call was Google, the third-biggest player in the public cloud market. It trails a long way behind its two main competitors, Microsoft’s Azure platform and the market leader, Amazon’s AWS.

In its response to the FTC, Google said that "licensing terms enforced by Microsoft, Oracle, and other legacy on-premises software providers distort competition in the cloud", contending that customers with on-premises packages from these companies face financial penalties if they try to migrate this data to a rival cloud provider.

US tech trade group NetChoice, which counts Google, Amazon and Meta among its members, has also aired its concerns. "Despite vibrant competition in the cloud industry, a few vendors use anti-competitive practices in order to entrench their position, most often by preventing customers from switching providers in search of lower costs, stronger service offerings, and more innovative solutions for their businesses," the group has told the FTC.

The FTC will now consider the responses. It is particularly interested in the impact of cloud computing on industries including "healthcare, finance, transportation, e-commerce, and defence", according to its announcement in March.

Tech Monitor has contacted both Microsoft and Oracle for comment.

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Regulators hone in on the public cloud

Google taking a swipe at Microsoft's cloud policies is nothing new. Last year it joined Amazon in hitting out at Microsoft's licensing terms, saying the way MSFT charges for its Office 365 productivity suite penalises companies that don't want to use Azure as their cloud provider.

Microsoft has been engaged in a battle with smaller European cloud providers, who say they are being unfairly excluded from the market by the tech giant's dominance, and filed an antitrust complaint with the EU last year. Though this dispute has reportedly been resolved, Google Cloud is still unhappy, and in March one of its executives labelled Microsoft's behaviour "anti-competitive".

UK regulators are also set to take a closer look at the cloud market. Communications watchdog Ofcom is currently undertaking a market study, and said in April that it believes the way AWS and Azure do business "could limit competition". The Ofcom probe concludes in October, and it is likely to recommend that competition regulator the Competition and Markets Authority conducts a full antitrust investigation.

Read more: Google Cloud launches AI-powered anti money laundering tools

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