Google files EU antitrust complaint accusing Microsoft of stifling cloud

Google filed an antitrust complaint with the European Commission on Wednesday accusing Microsoft of using unfair licensing contracts to stifle competition in the multibillion-dollar cloud computing industry.

At the heart of Google’s complaint is the allegation that Microsoft uses unfair licensing terms to “lock in” clients and exert control over the cloud market.

Google alleges that Microsoft, through its dominant Windows Server and Microsoft Office products, can make it difficult for its massive roster of clients to use anything but its Azure cloud infrastructure offering.

The internet giant said in its complaint that restrictions contained in Microsoft’s cloud licensing terms makes it harder for customers to move their workloads from Microsoft’s Azure cloud technology to competitors’ clouds, despite there being no technical barriers to doing so.

European businesses and public sector organizations have been forced to pay the firm up to 1 billion euros ($1.1 billion) a year in licensing penalties due to restrictions on customers’ ability to switch from one cloud provider to another, Google said, citing a 2023 study by CISPE, a trade body for the cloud computing sector.

The antitrust complaint from Google arrives after CISPE and its members in July agreed a settlement with Microsoft which would see the firm make changes to address competition concerns.

Referring to the CISPE settlement, Microsoft said in a statement Wednesday that it expects the European Commission to dismiss Google’s complaint.

“Microsoft settled amicably similar concerns raised by European cloud providers, even after Google hoped they would keep litigating,” a Microsoft spokesperson told CNBC via email. “Having failed to persuade European companies, we expect Google similarly will fail to persuade the European Commission.”

In a summary of the complaint, Google — which ranks third globally in the cloud computing market behind market leaders Amazon Web Services and Microsoft Azure, respectively — said that Microsoft “harms cybersecurity and undermines innovation.”

According to Google, if a company runs Microsoft’s Office suite of productivity tools and other applications on Google Cloud Platform or other competing clouds, they are effectively required to pay a “tax” in the form of punchy licensing fees to Microsoft.

Google said that Microsoft undermined competition in cloud, and referred to findings of a U.K. Competition and Markets Authority study which determined Microsoft acquired over 60% to 70% of all new British businesses in 2021 and 2022.

Google also suggested that Microsoft’s cloud practices have potentially made businesses more prone to security issues.

In an interview with CNBC’s Arjun Kharpal Wednesday, Amit Zavery, Google Cloud’s head of platform, said Google believes Microsoft is “100%” in violation of EU antitrust rules.

“We would like the cloud market to remain and become very vibrant and open for…