Microsoft faces EU unfair practices complaint –

Microsoft’s long-standing criticism of setting unfair terms for software services, such as Windows, to run on competitors’ cloud infrastructure could lead to an EU antitrust review following a new complaint.

The complaint regarding Microsoft’s unfair software licensing practices was filed with the European Commission on Wednesday (November 9) by the trade association of Cloud Infrastructure Service Providers in Europe (CISPE). ), which includes Amazon Web Services (AWS) from Amazon, French OVHcloud and Italian Aruba.

The industrial organization is also one of the main drivers of the Gaia-X initiative, a European data infrastructure project.

The accusation is not new, as several Microsoft customers in the EU complained as early as 2019 about the prohibitive cost of running Windows and Office Pack applications on cloud platforms other than Azure, such as Google Cloud and AWS.

Although Microsoft acknowledged the validity of these claims, few practical changes followed. Consequently, the CISPE association has brought the charge against the company, commissioning a report in October 2021 analyzing the alleged anti-competitive practices of Microsoft and Oracle.

CISPE argues in particular that Microsoft’s dominant position in the adjacent software licensing market has been used to give the US giant a competitive advantage in the cloud computing infrastructure market.

In other words, Microsoft is accused of putting rival cloud services in trouble by charging a higher price for productivity software, preventing “Bring Your Own License” agreements (BYOL), by imposing unfair billing practices, making ex-post changes to licensing terms, and combining products to increase cost.

“Leveraging its dominant position in productivity software, Microsoft is limiting choices and inflating costs as European customers seek to move to the cloud, causing distortions in Europe’s digital economy”said Francisco Mingorance, Secretary General of CISPE.

The lawsuit arose following the trade association’s attempt to bring software licensing into the scope of the Digital Markets Act (DMA). This recently adopted European regulation will introduce a series of do’s and don’ts for players who dominate a so-called critical online market so much that they will be considered ‘gatekeepers’.

CISPE considers Microsoft to act as a “gatekeeper”, but lobbying by the AWS-backed association failed and the scope of DMA was not changed accordingly. The only tool still available to the professional organization was therefore a formal anti-competitive complaint to the European Commission.

To ease antitrust concerns in the EU, the Windows vendor agreed to change its licensing terms in August to allow its customers to use Microsoft software services on Microsoft’s cloud infrastructure. ‘a third.

“The licensing changes we introduced in October give customers and cloud service providers around the world even more options to run and deliver our software in the cloud. We remain committed to addressing valid licensing concerns and supporting a competitive environment where all vendors can thrive.”a Microsoft spokesperson told EURACTIV.

CISPE believes, however, that these changes to the contractual conditions have only added new unfair practices by extending self-referencing practices to more services, by not dealing with the technical linking of different services and by introducing complex reporting obligations.

The trade association presented a list of potential solutions, including establishing an auditable control framework to test compliance with the “Ten Principles for Fair Software Licensing”, an initiative led by the CISPE and the French professional association Cigref.

It is now up to the European Commission’s competition department to assess the merits of the complaint and decide whether a formal investigation should be opened into it.

The EU executive has fined Microsoft more than €1.6 billion over the past decade for violating competition rules. The big tech company faces five other complaints from cloud competitors, including OVHcloud and Aruba.

Leave a Comment