Microsoft has reached a €20 million ($21.7 million) settlement to address an antitrust complaint regarding its cloud computing licensing practices, avoiding a potential European Union antitrust investigation and subsequent fines, Reuters news report said.
CISPE, an organization representing cloud services providers including Amazon and various smaller EU firms, in its complaint filed in late 2022, alleged that Microsoft’s contractual terms introduced on October 1, 2022, were harmful to Europe’s cloud computing ecosystem.
Despite being second to Amazon Web Services (AWS) but ahead of Google Cloud in the global cloud computing market, Microsoft has faced antitrust scrutiny worldwide due to its business practices. Microsoft’s revenue in Intelligent Cloud business has reached $26.7 billion, marking a 21 percent increase, during its fiscal third quarter. It is not clear how much money Microsoft makes from Cloud business due to the alleged business practices.
In 2024, Canalys expects global cloud infrastructure services spending to increase by 20 percent. In 2023, cloud infrastructure services spending grew 18 percent to $290.4 billion, up from $247.1 billion in 2022.
“After working with CISPE and its European members for more than a year, we’ve not only resolved their concerns of the past but also worked together to define a path forward that brings even more competition to the cloud computing market in Europe and beyond,” stated Microsoft President Brad Smith.
As part of the agreement, Microsoft will develop a product that allows CISPE members to run Microsoft software on their platforms using Microsoft’s Azure infrastructure at pricing equivalent to Microsoft’s own offerings. This product is expected to be available within nine months. Additionally, Microsoft will compensate CISPE members for revenue losses related to licensing costs over the past two years, though specific financial details were not disclosed.
The settlement notably excludes major players such as AWS, Google Cloud Platform, and AliCloud, prompting criticism.
An AWS spokesperson emphasized continued support for broader regulatory scrutiny of Microsoft’s practices.
Amit Zavery, head of Google Cloud, expressed hope for ongoing regulatory action to address Microsoft’s licensing strategies.
Amit Zavery said Google Cloud will look into other options in its fight against Microsoft’s licensing practices.
“Many regulatory bodies have opened inquiries into Microsoft’s licensing practices, and we are hopeful there will be remedies to protect the cloud market from Microsoft’s anti-competitive behavior,” Amit Zavery said.
“We are exploring our options to continue to fight against Microsoft’s anti-competitive licensing in order to promote choice, innovation, and the growth of the digital economy in Europe,” Amit Zavery said.
CISPE will withdraw its EU complaint and refrain from initiating or supporting similar complaints in Europe and beyond. “This agreement will provide a level playing field for European cloud infrastructure service providers and their customers,” commented CISPE Secretary General Francisco Mingorance.
Baburajan Kizhakedath
