Google asks UK regulators to investigate Microsoft's dominance in the cloud computing market

Google has formally reached out to the UK anti-competition regulators regarding Microsoft's business practices and dominance in the cloud computing market. This is not the first time Google has made an official complaint against Microsoft's cloud computing business. Earlier this year, Google filed a formal complaint with the Federal Trade Commission (FTC) accusing Microsoft of using its position to retain cloud customers.

In a complain letter obtained by Reuters, Google has accused Microsoft of using business tactics that left competitors at a significant disadvantage. This is not the first time UK regulators have received a complaint against Microsoft in relation to their cloud computing business. Earlier this year, Ofcom had asked the regulators to look into the business practices of Amazon and Microsoft as they were the leading cloud services providers in the region. This was followed by a formal investigation opened by the Competition and Markets Authority (CMA) into both Amazon and Microsoft.

In the letter submitted to the CMA, Google alleges that Microsoft's model and licensing practices discourage customers from going to their rivals for similar services.

With Microsoft’s licensing restrictions in particular, UK customers are left with no economically reasonable alternative but to use Azure as their cloud services provider, even if they prefer the prices, quality, security, innovations, and features of rivals,

Last year, Microsoft was forced to make amends to its licensing agreement after another investigation from the EU into the business. However, Google noted that those changes not enough to help a healthy competition in the industry.

A Microsoft spokesperson, on the hand, noted that these changes were made after the Redmond giant had consulted with independent cloud providers.

As the latest independent data shows, competition between cloud hyperscalers remains healthy. In the second quarter of 2023 Microsoft and Google made equally small gains on AWS, which continues to remain the global market leader by a significant margin.

Google's Cloud Vice President Amit Zavery gave a detailed statement to Reuters where he talked about why Microsoft poses a bigger threat to the industry even though Amazon AWS holds a bigger market share.

A lot of our software and cloud services interoperate, and can run on AWS or on Azure as well, so you're not restricted. If you don't fix this, eventually you will have fewer cloud providers, and then innovation will not really happen, and investments will start shrinking.

 

There are some issues, in terms of cloud interoperability, but we can fix that. That's a discussion between providers, which is much understood, and customers are forcing that conversation.

 

The problem we run into with Microsoft is that there's no technical issue, but you have licensing restrictions which means we are now being prevented from competing.

Google has made six different recommendations to the CMA which includes forcing Microsoft to improve interoperability and banning the company from withholding security updates for customers who switch to a different service.

The CMA has not commented on the letter and has not confirmed if it plans to open a formal investigation into Microsoft in regards to the allegations made by Google.

Source