Google Takes Aim at Microsoft in Epic Battle for Cloud Supremacy

Google has fired a major shot in the cloud computing wars, filing an antitrust complaint with the European Commission that accuses Microsoft of using underhanded tactics to stifle competition in the multibillion-dollar market.

The complaint, filed on Wednesday, centers around Microsoft’s alleged use of unfair licensing contracts in its Azure cloud computing business. Google claims that Microsoft is using these contracts to “lock in” customers and exert control over the market.

According to Google, Microsoft’s licensing terms contain restrictions that make it difficult for customers to move their workloads from Microsoft’s Azure cloud technology to competitors’ clouds. This, despite there being no technical barriers to doing so.

Google also cites a 2023 study by CISPE, a trade body for the cloud computing sector, which found that European businesses and public sector organizations have been forced to pay up to 1 billion euros ($1.1 billion) a year in licensing penalties due to these restrictions. This, Google claims, is a “tax” that customers must pay to Microsoft in the form of hefty licensing fees.

The internet giant also points to a U.K. Competition and Markets Authority study, which determined that Microsoft acquired over 60% to 70% of all new British businesses in 2021 and 2022. Google claims that this dominance not only hurts competition but also undermines innovation and makes businesses more prone to security issues.

Amit Zavery, Google Cloud’s head of platform, told CNBC that Microsoft is “100%” in violation of EU antitrust rules. “We would like the cloud market to remain and become very vibrant and open for all providers, including European vendors, vendors like us, AWS, and others,” Zavery said.

Zavery also criticized Microsoft for imposing restrictions on customers once it realized the massive commercial potential of cloud computing technology. “Today, the restrictions do not allow choice for customers,” Zavery said. “We would want those restrictions to be removed and allow customers to choose whatever cloud provider they think is best for them commercially and technically.”

The complaint comes after a group of cloud companies agreed to a settlement with Microsoft in July, which will see the firm make changes to address competition concerns. However, Google chose not to participate in the settlement, citing concerns that it did not go far enough in addressing the issues.

For its part, Microsoft has denied that its cloud practices harm competition. In response to a cloud market study initiated by the U.K.’s Competition and Markets Authority, the firm said that it “firmly believes that the cloud services market is functioning well.”

The European Commission has yet to comment on the complaint, but it is likely to spark a major investigation into Microsoft’s business practices. The outcome could have significant implications for the cloud computing market and the companies that operate within it.