Microsoft announced on Tuesday that it is facing a significant £1 billion lawsuit in the UK over allegations of anti-competitive practices regarding its cloud services.
The lawsuit, led by Dr Maria Luisa Stasi and the law firm Scott+Scott, claims that Microsoft unfairly charges higher licensing fees for its Windows Server software when used with rival cloud providers like Amazon Web Services (AWS) and Google Cloud.
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Allegations of unfair pricing
The complaint focuses on allegations that Microsoft unfairly charges users who choose for other cloud services in order to encourage them to utilise its Azure platform.
Stasi stated, “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.” This alleged behaviour affects thousands of businesses and raises concerns about competition in the cloud market.
The legal action is characterised as an “opt-out” collective suit, meaning all affected businesses are automatically included unless they choose to opt-out.
This approach aims to simplify the process for claimants who might otherwise hesitate to engage in lengthy legal battles against a tech giant like Microsoft.
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Broader implications for competition
This lawsuit comes amid increasing scrutiny of Microsoft’s practices by regulatory bodies. The UK’s Competition and Markets Authority (CMA) is investigating the cloud market, with findings expected in December 2024. Previous complaints against Microsoft in Europe regarding similar issues have suggested a pattern of behaviour that regulators are keen to address.
Nicky Stewart from the Open Cloud Coalition emphasised the importance of fair competition in fostering innovation and consumer choice.
He stated, “Unfair software licensing practices… disproportionately harm competition and innovation across the cloud ecosystem”.
The outcome of this lawsuit could have far-reaching implications for Microsoft and how cloud services are priced and offered across the industry.
As this case unfolds, it highlights the ongoing challenges businesses face navigating the complexities of cloud computing and software licencing. The stakes are high as affected organisations seek compensation and a more equitable market landscape.