Microsoft has found itself in hot waters once again. This time, the tech behemoth is embroiled in a legal dispute in the UK, and has been accused of abusing its dominance in operating systems to charge higher fees for businesses using its software on rival cloud platforms. The case, filed in the UK’s Competition Appeal Tribunal, seeks compensation of over £1 billion ($1.27 billion), alleging that Microsoft’s pricing practices are anti-competitive and have harmed businesses that use Amazon Web Services (AWS), Google Cloud, and Alibaba Cloud (that is, systems other than Microsoft Azure) for cloud computing.
The centerpiece of the legal dispute is Microsoft’s licensing model for its Windows Server software, which is widely used in cloud computing. As per the lawsuit, enterprises must pay higher licensing fees if they use Windows Server on cloud platforms other than Microsoft’s own Azure service. According to the claimants, this pricing structure puts companies that rely on competing cloud services at a disadvantage, thus creating a financial incentive for businesses to switch to Azure. This, in turn, impacts competition in the cloud computing segment, making it more expensive for companies to choose rival platforms like AWS, Google Cloud, or Alibaba Cloud.
The lawsuit, led by competition lawyer Maria Luisa Stasi, represents thousands of U.K. businesses and organizations that claim to have been overcharged for using Microsoft’s software on non-Azure platforms. The case is an “opt-out” collective action, meaning that any business potentially affected by these practices is automatically included in the lawsuit unless they choose to opt out. According to the plaintiffs, Microsoft’s actions violate competition law, and the lawsuit seeks both compensation for overcharges and changes in Microsoft’s market practices.
“Put simply, Microsoft is punishing UK businesses and organisations for using Google, Amazon and Alibaba for cloud computing by forcing them to pay more money for Windows Server,” Stasi said, adding that by doing so, the company is “trying to force customers into using its cloud computing service Azure and restricting competition in the sector.” A loss for Microsoft could result in substantial financial penalties, as well as an overhaul of the company’s existing licensing practices.
This development adds to the list of legal disputes that Microsoft has faced over the years. Recent times has seen the tech titan (and other Big Tech firms) attract regulatory scrutiny, and the U.K.’s Competition and Markets Authority (CMA) is currently conducting an investigation into the cloud sector to assess whether Microsoft’s licensing practices and its market behavior are stifling competition in the market. The company recently settled an antitrust complaint with the cloud trade association CISPE, agreeing to equalize the licensing fees for using its software on smaller cloud platforms. It is also facing the music in the US, where the Federal Trade Commission (FTC) has launched its own investigation into its cloud computing practices.
