Google Files Complaint with EU Regarding Microsoft’s Cloud Practices

Google has initiated a complaint with the European Commission, targeting what it describes as Microsoft's anti-competitive practices aimed at locking customers into its cloud platform, Azure. This move comes amid intensifying competition in the cloud computing sector, where Microsoft and Amazon Web Services (AWS) stand as Google’s primary rivals. Google contends that Microsoft is leveraging its dominant Windows Server operating system to stifle competition and restrict customer choices.

According to Amit Zavery, Google Cloud's vice president, Microsoft imposes a staggering 400 percent markup on businesses that wish to run Windows Server on competing cloud platforms. This exorbitant cost barrier does not apply to users of Azure, effectively nudging customers toward Microsoft’s cloud services. Additionally, Google claims that organizations utilizing rival cloud infrastructures receive delayed and limited security updates compared to those using Azure, further entrenching Microsoft’s position in the market.

Supporting its claims, Google referenced a 2023 study by the Cloud Infrastructure Services Providers in Europe (CISPE), which indicated that European businesses and public sector entities could be spending as much as 1 billion euros (approximately $1.63 billion) annually on Microsoft licensing penalties. This figure underscores the financial strain that Microsoft's licensing practices are placing on organizations seeking flexibility in their cloud computing options.

Earlier in July, Microsoft reached a 20-million-euro settlement regarding antitrust allegations related to its cloud computing licensing practices with CISPE, thus averting a more extensive EU investigation. However, this settlement did not extend to AWS, Google Cloud Platform, or AliCloud, which drew criticism from Google and AWS, indicating ongoing frustrations with Microsoft's approach.

In response to Google’s allegations, Microsoft asserted that it had amicably resolved similar concerns with other European cloud providers, suggesting that Google’s attempts to escalate the matter are a sign of its failure to gain traction with European companies. A Microsoft spokesperson remarked, "Having failed to persuade European companies, we expect Google similarly will fail to persuade the European Commission."

Google further accused Microsoft of creating vendor lock-in through its collaboration application, Teams, compelling customers to adopt it even when they prefer other solutions. Zavery emphasized the urgency of the situation, stating, “The time to act is now. The cloud market will get more and more restrictive if things don't happen now.” Google advocates for immediate regulatory intervention to dismantle what it describes as Microsoft's "vendor lock," aiming to foster a more competitive environment.

The call for regulatory action comes as Google highlights Microsoft's dominance in the European market, where it claims Windows Server and associated products hold over 70 percent market share among businesses. Historically, Microsoft allowed its software to operate on various hardware platforms, but the company began imposing restrictions in 2019 as it expanded into the cloud sector.

The cloud computing market itself is experiencing rapid growth, with annual increases of around 20 percent in the European Union. Despite this expansion, a recent McKinsey study revealed that two-thirds of EU companies have migrated less than half of their workloads to the cloud, indicating significant untapped potential in this arena.

Google's complaint and its broader implications reflect the ongoing tension in the cloud computing industry, as major players navigate regulatory challenges and competitive pressures. As the complaint progresses, it could catalyze a re-evaluation of existing practices within the cloud services landscape, potentially reshaping the dynamics of competition in this burgeoning market. The outcome may determine not only the future of Google and Microsoft’s rivalry but also the level of choice and flexibility available to customers seeking cloud solutions.