Microsoft launches cloud changes following EU competition inquiries

In early April, a questionnaire sent to the company’s rivals and customers signalled the start of preliminary inquiries by EU antitrust authorities into the company’s cloud service practices, a move that could lead to a more official investigation. [Shutterstock / Nopparat Khokthong]

**Updates story to clarify Amazon is part of the group making the criticism.

Microsoft will adapt its licensing conditions in response to complaints from cloud providers and the rumblings of a competition investigation from the European Commission. 

The newly announced initiatives primarily centre on making it easier for cloud service providers to host Microsoft products and setting out principles under which the company said it would ground the running of its cloud business in Europe.

But there could be more changes in the pipeline as Microsoft’s President and Vice Chair Brad Smith said in a blog post, “Before turning to the details, I think it’s important at the outset to acknowledge that these steps are very broad but not necessarily exhaustive,” adding that this is one big step but not necessarily the last.

The move comes in reaction to a potential impending antitrust investigation in Brussels.

In March, multiple European cloud players brought a case before the Commission, arguing Microsoft was engaging in anti-competitive practices by making it more expensive for customers to use a licensing system other than its own cloud infrastructure, Azure. 

French cloud player brings yet another anti-trust case against Microsoft

European cloud players, including France’s OVHcloud, have brought a new case before the European Commission, claiming that US-based giant Microsoft is engaging in anti-competitive practices on the market

In early April, a questionnaire sent to Microsoft’s rivals and customers signalled the start of preliminary inquiries by EU antitrust authorities into their cloud service practices, a move that could lead to a formal investigation. 

Speaking at an event in Brussels on Wednesday (18 May), Smith, said that, following discussions with cloud providers in Europe, the company recognises the validity of some, but not all, the complaints being raised. 

Smith also said the company had had too narrow a focus on competing with major rivals such as Amazon, the only firm that ranks ahead of Microsoft in terms of global cloud service sales.

Over the past few years, our focus on competing with the largest technology providers has resulted in us not being as attentive to the impact on our cloud provider partners”, Smith said. “We are making changes to remedy this, beginning today.”

The initiative set out on Wednesday is aimed at cloud providers in Europe, including the UK, and will see the expansion of Microsoft’s existing Cloud Solution Provider program, which currently links providers with cloud services. 

The updated program will allow European cloud providers to incorporate software such as Windows and Office 365 directly into the products they develop and host and provide their services on an equal footing to customers, regardless of whether their software has been purchased from other Microsoft partners. 

In addition, the company will seek to simplify its licensing terms per the first of the ten Fair Software Licensing Principles launched last year by CIGREF – a network of large corporations – and CISPE, which represents cloud providers in Europe. 

The measures announced, however, were not wholly well received by CISPE, of which AWS, Amazon’s cloud platform and Microsoft rival, is a prominent member.

The Initiative announced today fails to tackle in any meaningful way the unfair licensing practices at the heart of complaints and concerns among cloud infrastructure service providers and customers across Europe”, said the alliance’s Secretary-General, Francisco Mingorance.

“It does nothing to end the anti-competitive tying of productivity suites with cloud infrastructure services”, he continued, adding, “the Commission must continue its investigation for the sake of European cloud customers.”

Also amongst the company’s proposals is the establishment of a new team to work exclusively with cloud service providers in Europe and the development and initiation of closer partnerships with local providers. 

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A joint investigation was launched by 22 national data protection authorities on Tuesday (15 February) on how the public sector uses cloud services.

[Edited by Alice Taylor]

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