Microsoft is facing a lawsuit in the U.K. over allegations that it has been unfairly overcharging customers who use its Windows Server software on rival cloud platforms, including Amazon Web Services (AWS), Google Cloud, and Alibaba Cloud, Reuters reports.
Filed on Tuesday, the lawsuit claims that U.K. businesses have been forced to pay higher licensing fees when running Microsoft’s software on these competing platforms compared to using Microsoft’s own Azure service. The total damages sought in the case exceed £1 billion ($1.27 billion), with the lawsuit arguing that Microsoft’s pricing strategy harms competition in the cloud market.
The legal action, led by competition lawyer Maria Luisa Stasi, targets businesses that have paid more to run Windows Server on cloud platforms other than Azure. According to Stasi, the higher fees act as a financial incentive for customers to move to Azure, thus restricting competition. “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 in a statement.
She aims to challenge Microsoft’s alleged anti-competitive behavior and push the company to reveal how much businesses have been overcharged.
Thousands of U.K. companies are represented in this “opt-out” collective action, meaning businesses that might be affected by the overpricing are automatically included in the suit and can claim compensation if the case succeeds.
The lawsuit follows a series of European regulatory actions against Microsoft for similar issues, including a settlement earlier this year with the cloud trade body CISPE. This settlement addressed complaints over unfair software licensing practices and resulted in Microsoft agreeing to charge consistent prices for its software across smaller cloud providers.
Alongside the lawsuit, the U.K. Competition and Markets Authority (CMA) is preparing to take action on anti-competitive practices in the cloud sector after an investigation. Sources indicate that the CMA could issue its provisional decision in the coming weeks, as it has set a deadline for late 2024 to conclude its review.
This case adds to growing concerns that Microsoft is exerting too much control over the cloud market, especially after reports that the share of European cloud providers has dropped significantly, from 27% in 2017 to 13% in 2022.
Featured Image courtesy of Aleksander Kalka/NurPhoto via Getty Images
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