European Regulators Raise Questions About Microsoft Cloud Practices
(Bloomberg) -- European regulators are asking Microsoft Corp. partners and rivals for information related to a complaint made against the software maker alleging anti-competitive behavior in the cloud-computing services market.
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The European Commission in March circulated a questionnaire, seen by Bloomberg News, focusing on how Microsoft licenses its products. The questions may lead to a formal inquiry, and follows an antitrust complaint last year from France’s OVH and two other cloud providers to the European Union’s antitrust watchdog over Microsoft’s behavior.
The questionnaire asks respondents whether they have signed agreements to be part of Microsoft programs that allow other partner and cloud providers to resell Microsoft programs, as well as questions around whether the company is making it harder or more expensive to run some of its programs on rival cloud providers networks.
“We can confirm indeed that the commission has received the complaint,” a press officer for the European Commission said. “At this stage we cannot share any other information about this.”
Microsoft — the maker of market-leading Office and Windows software — is also the No. 2 global seller of cloud infrastructure, renting computing power and storage delivered over the internet to customers. Amazon.com Inc. is the largest vendor of such services, and Alphabet Inc.’s Google is trying to catch Microsoft. As companies increasingly mix and match programs from the vendors, or use multiple clouds, OVH and others are claiming Microsoft’s software licensing terms put them at a disadvantage for running Microsoft products and make it easier or cheaper to pair things like Windows, Office and Windows Server with Microsoft’s own Azure cloud.
“The cloud market is growing and European cloud providers have built successful business models using Microsoft software and services,” Microsoft said in an emailed statement. “We’re continuously evaluating how we can best support partners and make Microsoft software available to customers across all environments, including those of other cloud providers.”
Microsoft has largely escaped the global antitrust scrutiny facing other large tech companies like Meta Platforms Inc., Apple Inc., Google and Amazon. But the European Union this month hammered out a deal on a new law that paves the way for multibillion-euro fines and acquisition bans for the worst transgressors of a new Digital Markets Act. The rules target so-called gatekeeper companies with the power to control distribution in their markets. That includes Microsoft.
The request for information asks for details on things like whether Microsoft's cloud-based Windows and Office products are capable of running on rival’s cloud products or whether Microsoft would need to “make technical adjustments” to enable that. And it inquires if the respondent feels it needs to include certain Microsoft products or services in its own cloud infrastructure offering “in order to compete effectively.”
The companies were also asked to compare the software licensing conditions their customers receive with those Microsoft extends to its own customers under a program called Azure Hybrid Benefit Program. It gives clients a discount for running certain Microsoft products, like Windows Server, in Azure rather than another cloud provider. The companies have until April 7 to respond to the questionnaire.
The questionnaire likely forms part of the commission’s initial fact finding exercise, said Richard Pepper, partner at Macfarlanes LLP. “At this stage, it’s too early to meaningfully judge whether this will take action. Nevertheless, this is definitely an area of focus for the commission.”Microsoft previously faced more than a decade of antitrust disputes with the European Union that ended in 2009 with the company agreeing to give Windows users a choice among web browsers. The Redmond, Washington-based software maker also paid out 1.68 billion euros in files in EU antitrust probes prior to that date.
(Updates with Microsoft’s statement in sixth paragraph.)
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