Microsoft cloud practices are anti-competitive

Alphabet’s Google Cloud has accused Microsoft of anti-competitive cloud computing practices and criticised imminent deals with several European cloud vendors, saying these do not solve broader concerns about its licensing terms.

In Google Cloud’s first public comments on Microsoft and its European deals its Vice President Amit Zavery told Reuters the company has raised the issue with antitrust agencies and urged European Union antitrust regulators to take a closer look.

In response, Microsoft referred to a blogpost in May last year where its president Brad Smith said it ‘has a healthy number two position when it comes to cloud services, with just over 20 percent market share of global cloud services revenues’.

“We are committed to the European Cloud Community and their success,” a Microsoft spokesperson told Reuters on Thursday.

There is intense rivalry between the two US tech giants in the fast-growing, multi-billion-dollar cloud computing business, where Google trails market leader Amazon and Microsoft.

The sector has recently drawn greater regulatory scrutiny, including in the United States and in Britain, because of the dominance of a few players and its increasingly critical role as more and more companies shift their services to the cloud.

Microsoft has offered to change its cloud computing practices in a deal with a few smaller rivals which in turn will suspend their antitrust complaints, a person with direct knowledge of the matter told Reuters this week.

The move will stave off an EU investigation.

“Microsoft definitely has a very anti-competitive posture in cloud. 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,” Zavery said in an interview late on Wednesday.

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“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,” he added.

Microsoft’s unfair advantage?

Zavery said individual deals struck with several smaller European cloud vendors only benefit Microsoft.

“They’re selectively kind of buying out those ones who complain and not make those terms available to everyone. So that definitely makes it an unfair advantage to Microsoft and ties the people who complained back to Microsoft anyway,”

“Whatever they’re offering, there should be terms across for everybody, not just for one or two they’ve chosen and pick, and that shows you that they have so much market power they can kind of go and do those things individually.”

“My point to the regulators would be that they should look at this holistically, even though one or two vendors might settle doesn’t solve the broader problem. And that’s the problem we need to really resolve, not individual vendors’ problems.”

The European Commission declined to comment.

Microsoft still faces another EU antitrust complaint from CISPE, whose members include Amazon. The trade group has rejected the Microsoft’s changes.

Zavery dismissed the suggestion that the issue is merely a spat between both companies.

“The question is not about Google. I just want to make it very clear. It’s the cloud. The premise with cloud was to have an open, flexible way to deploy your software and have customers more choices so that they can run their software in any place they choose to in a much more easy way,” he said.