Microsoft is under intense scrutiny in the United Kingdom as it faces a £1 billion lawsuit alleging unfair pricing practices that stifle competition in the cloud computing market. The lawsuit, led by competition lawyer Maria Luisa Stasi, accuses the tech giant of overcharging businesses using rival platforms like Amazon Web Services (AWS), Google Cloud, and Alibaba Cloud to host its widely-used Windows Server software.
Allegations of Overcharging and Anti-Competitive Behavior
At the heart of the lawsuit is Microsoft’s pricing strategy, which reportedly offers more favorable licensing fees for its Windows Server software on its own Azure cloud platform compared to competitor platforms. This pricing disparity, the lawsuit claims, effectively penalizes businesses for opting for alternative cloud solutions, forcing them to pay higher fees.
“Microsoft is punishing UK businesses and organizations for using Google, Amazon, and Alibaba for cloud computing by forcing them to pay more money for Windows Server,” said Stasi. She emphasized that the lawsuit seeks to uncover the extent of these overcharges, compel Microsoft to address its pricing practices, and return compensation to affected businesses.
Stasi’s legal team represents thousands of British businesses and organizations in an “opt-out” collective action, meaning all affected companies are automatically included unless they choose otherwise.
Broader Regulatory Pressure and Market Impact
The lawsuit comes amid increasing scrutiny of anti-competitive practices in the cloud industry by the U.K.’s Competition and Markets Authority (CMA). The CMA is expected to release a provisional decision on the matter by December 2024. This follows a series of global complaints and settlements involving Microsoft.
Earlier this year, Microsoft resolved a 20-million-euro antitrust complaint with the European cloud trade body CISPE, agreeing to standardize its licensing fees across smaller cloud providers. However, the company continues to face criticism from industry players. In September 2024, Google filed a fresh antitrust complaint with the European Commission, alleging that Microsoft’s licensing terms limit customers’ ability to switch to other platforms.
Declining European Cloud Market Share
The European cloud market has struggled to compete with dominant U.S. providers like Microsoft, Amazon, and Google. According to Synergy Research Group, the market share of European cloud providers fell from 27% in 2017 to just 13% in 2022, despite overall market growth during the period.
Solange Viegas Dos Reis, chief legal officer of French cloud provider OVHCloud, highlighted the challenges faced by smaller cloud players. She noted that hyperscalers like Microsoft often bundle their software and infrastructure, providing more functionality when used on their own platforms, thus discouraging businesses from choosing third-party providers.
OVHCloud, which settled its own antitrust complaint with Microsoft in July 2024, expressed optimism about ongoing regulatory investigations. “There’s hope that the CMA’s case will bring more fairness and transparency to the market,” said Dos Reis.
