Microsoft nears resolution of EU antitrust cloud complaints • The Register

Microsoft is close to resolving antitrust complaints filed by local providers OVHcloud, Aruba SpA and Danish Cloud Community (DCC) with the European Commission over alleged commercial abuse.

The details of the said settlement remain classified and unlikely to be released in detail, frustrating efforts by others to confront the US software and cloud giant for allegedly controlling market behavior.

OVHcloud, Aruba and DCC filed a joint complaint against Microsoft in May, with OVH itself confirming that they are pushing authorities for a “level playing field for cloud providers” and saying Microsoft is “undermining fair competition”.

The complaint focused on the higher costs of buying and running Microsoft software on clouds other than Azure and technical customizations required to run some programs on competitor clouds.

Fast forward to this week and talkative sources close to the situation indicate that Microsoft has agreed to settle the case, according to Bloomberg, and will be proposing binding commitments shortly.

A Microsoft spokesman said it hadn’t given a statement on the “possible settlement,” but had something more general to say about license changes.

“In October 2022, we introduced changes to our licensing practices that address feedback we heard from European cloud providers,” Microsoft said. “We’re grateful for the productive conversations that got us there and appreciate the feedback we’ve received since then. We are committed to the European Cloud Community and its success.”

We asked the Europe-based cloud trio for their opinion and found that they were all very reluctant to say anything substantive, possibly because the terms of any settlement would be confidential and likely also include a financial element on top of Microsoft’s commitments .

OVHcloud informed us: “Sorry, we have no comment on this matter”, Aruba SpA did not respond to a request for comment and Jen Erik Thorndahl, Director at DCC, told us: “Thank you for your email. We have no comment on the case.”

Microsoft admitted in May last year that it had to revise certain software licensing and cloud policies amid threats of a public scrutiny of its conduct by the European Commission. The new terms and conditions contractually imposed by Microsoft addressed some issues and introduced new ones, sources tell us.

The Cloud Infrastructure Service Providers in Europe (CISPE) group, which represents 24 cloud providers, itself filed a formal competition complaint against Microsoft in November, saying the provider uses: in” to “restrict choices.”

It claimed Microsoft’s actions violated Article 102 TFEU and provided grounds for the European Commission to open a formal investigation.

Francisco Mingorance, Secretary General of CISPE, whose members include OVH, Aruba and many others, told us today that the trio’s decision to come to an agreement with Microsoft was “disappointing in many ways”.

He added:

CISPE suspects that the deals Microsoft could make with the three European cloud providers differ from each other, possibly because the complaints themselves differ slightly.

Mingorance said his own complaint focused on “discriminatory pricing” in the Microsoft Service Provider Licensing Agreement (SPLA).

“It appears the new terms will apply through a new program called CSP Hoster, leaving the SPLA as is. Our members’ concern that CSP hosters are essentially turning their customers into direct customers of Microsoft, as one put it: ‘Microsoft’s solution to potential’ competitive research appears to be turning cloud infrastructure providers into Microsoft resellers!’

“CISPE holds its own,” he added. “Although we had a meeting with Microsoft regarding these issues, we have seen nothing to encourage us and we will follow up our complaint. If concessions can be offered that solve our problems, they have to be market wide (all cloud infrastructure service providers in Europe), accessible to all customers – every company has to be able to get the software they want in the cloud of theirs choice without financial, technical or other unfair constraints, and any solution must be fundamentally future-proof and auditable to ensure ongoing compliance.

“We still believe that a formal investigation and settlement is the best way forward,” concluded Mingorance.

In a statement from the US-based Coalition for Fair Software Licensing, Executive Director Ryan Triplette claimed, “The news that Microsoft is expected to reach agreements and settlements with three European cloud providers is an admission of its anti-competitive tactics and unfair licensing practices.”

The campaign group was formed in the US last year to address local concerns and created a nine-point vendor code of conduct.

“These private settlements will not resolve or address the company’s restrictive software licensing tactics that continue to limit choice for cloud customers worldwide. Until Microsoft honors its commitment to address these concerns, cloud customers will continue to suffer from higher prices and fewer choices.”

Germany-based company Nextcloud was also a supporter of CISPE’s complaint and has highlighted the German federal agency’s decision to open an informal investigation into whether Microsoft holds a dominant position.

That seems terse and dry given the stranglehold that AWS, Microsoft and Google have in Europe, which along with IBM, Oracle and Salesforce accounted for 72 percent of customer spend on clouds for the calendar quarter.

Frank Karlitschek, CEO of the founder of Nextcloud GmbH, said in a statement: “Microsoft continues to act as the gatekeeper, picking the winners and losers. And of course, its own services benefit immensely by being shielded from the competition.

“This brazen effort to promote its services at the expense of competitors and skew the market in their favor harms consumers, the wider market and European businesses, and threatens countries’ digital sovereignty.”

Microsoft is gaining ground in the games console sector, investing in AI and the “third pillar” is cloud computing, said Auke Haagsma, a former head of unit at the European Commission and strategic adviser to CISPE last month.

“Cloud services benefit from scale – not only in terms of cost-efficiency, but also in terms of collecting, mining and extracting insights from the masses of data that traverse them,” he wrote in Euroactiv.

“The cloud, AI and games are the foundations of the next wave of growth and innovation in the digital world. Developing dominance in any of these areas would hamper the competitiveness of European companies and harm the EU’s broader digital and sustainability goals. “Allowing one company to dominate all three critical elements would be disastrous for competing in digital markets,” he said