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Google pushes for antitrust action against Microsoft in UK cloud market

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By Martin Coulter

LONDON, Nov 30 (Reuters) -Google GOOGL.O has called on Britain’s antitrust regulator to take action against Microsoft MSFT.O, claiming its business practices had left rivals at a significant disadvantage, according to a letter seen by Reuters.

Microsoft and Amazon AMZN.O have faced mounting scrutiny around the world over their dominance of the cloud computing industry, with regulators in Britain, the European Union, and the U.S. probing the leading providers’ market power.

The CMA (Competition and Markets Authority) launched an investigation into Britain’s cloud computing industry in October, following a referral from media regulator Ofcom which highlighted Amazon and Microsoft’s dominance of the market.

In 2022, Amazon Web Services (AWS) and Microsoft's Azure had a combined 70-80% share of Britain's public cloud infrastructure services market, Ofcom said. Google’s cloud division was their closest competitor, at around 5-10%.

In a letter submitted to the CMA, Google said Microsoft’s licensingpractices,unfairly discouraged customersfrom using competitor services, even as a secondary provider alongside Azure.

“With Microsoft’s licensing restrictions in particular, UK customers are left with no economically reasonable alternative but to use Azure as their cloud services provider, even if they prefer the prices, quality, security, innovations, and features of rivals,” Google said in its letter to the CMA.

Such practices directly harmed customers, and were the only significant barrier to competition in Britain’s cloud computing market, the company said.

Microsoft last year updated its licensing rules to address such concerns and promote competition, though the changes did not satisfy rivals. Microsoft declined to comment for this story.

Speaking to Reuters, Google Cloud Vice President Amit Zavery criticised Microsoft’s practices, and said his company was committed to a multi-cloud approach, in which customers could easily move between providers depending on their needs.

"A lot of our software and cloud services interoperate, and can run on AWS or on Azure as well, so you're not restricted," he said. "If you don't fix this, eventually you will have fewer cloud providers, and then innovation will not really happen, and investments will start shrinking."

At issue was Microsoft's decision to update the terms for when customers wanted to use their Windows or other software licenses in the cloud, effectively resulting in higher costs if they used Google or AWS instead of Microsoft's Azure.

Asked why Amazon, which boasts a larger share of the cloud market than Microsoft, did not pose a similarly anticompetitive risk, Zavery said AWS consumers were not facing the same restrictions.

“There are some issues, in terms of cloud interoperability, but we can fix that. That's a discussion between providers, which is much understood, and customers are forcing that conversation,” he said.

“The problem we run into with Microsoft is that there's no technical issue, but you have licensing restrictions which means we are now being prevented from competing.”

Google made six recommendations to the CMA, including forcing Microsoft to improve interoperability for customers using Azure and alongside other cloud services, and banning it from withholding security updates from those that switch.

The CMA did not immediately respond to a request for comment.

Reporting by Martin Coulter in London; additional reporting by Jeffrey Dastin in New York; editing by Kenneth Li and Lincoln Feast


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