Microsoft Faces Antitrust Action From Google in the UK Cloud Market

According to a letter obtained by Reuters, Google has urged Britain’s antitrust regulator to take action against Microsoft, arguing that its business methods have put competitors at a major disadvantage.

Global Scrutiny: US, UK, and EU Investigate Microsoft and Amazon in Cloud Computing

Regulators in the United States, the United Kingdom, and the European Union are investigating Microsoft and Amazon’s market dominance in the cloud computing space, which has drawn increasing attention from around the globe.

In October, the Competition and Markets Authority (CMA) in Britain opened an investigation into the cloud computing sector after media watchdog Ofcom brought attention to Amazon and Microsoft’s market dominance.

Market Share Dynamics: Microsoft’s Azure and Amazon’s AWS Dominance in Britain

According to Ofcom, in 2022, Microsoft’s Azure and Amazon Web Services (AWS) will have a combined 70–80% market share in Britain for public cloud infrastructure services. With a share of between 5 and 10%, Google’s cloud division was their nearest rival.

Google’s Allegations: Unfair Licensing Policies by Microsoft Impacting Competition

Google claimed in a letter to the CMA that consumers were unjustly deterred from using rival services, even when Azure was their primary supplier, by Microsoft’s licensing policies.

“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 wrote in a letter to the CMA, citing Microsoft’s licensing restrictions in particular.

The company claimed that these actions hurt customers directly and constituted the sole real impediment to competition in the British cloud computing sector.

Although competitors were not pleased with the changes, Microsoft revised its licence guidelines last year to allay these worries and encourage competition.

According to a Microsoft representative, the company has collaborated with independent cloud providers to tackle issues and offer opportunities, and over 100 users globally have benefited from the modifications.

“The most recent independent data indicates that cloud hyperscale rivalry is still strong. A representative for Microsoft stated that “AWS continues to be the global market leader by a significant margin. In the second quarter of 2023, Microsoft and Google made similarly small gains on AWS.”

Cloud Provider Strategies: Google Cloud’s Multi-Cloud Approach and Criticism of Microsoft

Google Cloud Vice President Amit Zavery criticised Microsoft’s methods in an interview with Reuters, stating that his business was dedicated to a multi-cloud strategy that would allow users to quickly switch between providers based on their requirements.

“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 stated. “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.”

The move by Microsoft to modify the terms under which users could use their Windows or other software licences in the cloud was in question because it essentially increased the cost of using Google or AWS instead of Microsoft’s Azure.

When asked why Amazon, with a bigger cloud market share than Microsoft, did not provide a comparable danger of anti competitive behaviour, Zavery said because AWS customers were not subject to the same limitations.

“Cloud interoperability has a few problems, but we can resolve them. Customers are driving that discourse, which is a widely acknowledged provider-customer engagement, he said.

“The issue we have with Microsoft is that, while there isn’t a technical problem, you have licensing restrictions, which means we can no longer compete.”

Google’s Proposals to CMA: Calls for Interoperability and Security Upgrade Transparency

Google presented the CMA with six proposals, two of which were to prevent Microsoft from preventing customers who transfer from Azure to other cloud services by requiring it to increase interoperability and to stop withholding security upgrades.

A request for comment was not immediately answered by the CMA.