Microsoft facing antitrust complaint in Europe about its cloud services

OVHcloud said it has filed a complaint with the European Commission, the EU’s top competition regulator. The complaint focused on the way Microsoft licenses its products, such as its Office productivity suite, which could make it more expensive to use cloud services that compete with Microsoft’s Azure cloud, people familiar with the complaint said. he said.

The complaint, which OVHCloud filed last summer but which was not previously reported, also alleges that Microsoft’s software doesn’t work as well on other cloud services, making it harder for them to compete. , people said.

“By abusing its dominant position, Microsoft undermines fair competition in the cloud computing services market and limits consumer choice,” said a spokesperson for OVHcloud, whose formal name is OVH Groupe SAS.

A Microsoft spokesperson would not immediately confirm that the company was notified of the complaint, but said European cloud companies are building successful businesses using Microsoft products.

“Cloud providers enjoy a range of options for providing cloud services to their customers using Microsoft software, whether purchased by the customer or partner,” a Microsoft spokesperson said in a statement. “We’re constantly evaluating how we can best support partners and make Microsoft software available to customers in all environments, including other cloud providers.”

OVHcloud said the complaint was filed jointly with “multiple companies”. Other companies will not be named in it.

As governments around the world have gone after big tech companies, Microsoft hasn’t been the center of attention. The company itself had learned from its own antitrust battles two decades ago when the US Department of Justice and the European Union sued the company for its business practices.

Much of the government investigation has targeted the other four big US tech giants—Facebook-owner Meta Platform Inc., Google-parent Alphabet Inc., Apple Inc. and Amazon.com Inc. The U.S. House Antitrust Subcommittee’s 2020 report, for example, aimed its 16-month inquiry on the market power of those four other companies, not Microsoft.

European policymakers and lawmakers have recently moved to more closely regulate the cloud market. Even though Microsoft doesn’t have a major cloud market share, the company continues to combine its historical strength in areas such as business applications with its rapidly growing cloud business. In the 1990s, Microsoft got into trouble by bundling the practices into its operating systems.

Two other recent complaints in Europe also allege that Microsoft is bundling cloud products in an anti-competitive manner. In 2020, San Francisco-based business-messaging app Slack Technologies Inc. complained to the European Union about Microsoft’s bundle of its rival Teams’ workplace-collaboration product with its popular Office software. Last year, German cloud-storage company Nextcloud complained to the European Union about Microsoft bundling its OneDrive storage product with the Windows operating system.

After Nextcloud made its complaint public, the company formed a coalition of other European companies and nonprofits calling out Microsoft.

The EU is currently finalizing legislation that would designate several large US-based companies, including Microsoft, as “gatekeepers,” who would be required to comply with a new set of rules governing how they treat competitors and consumers. We do. A second proposed law seeks to force tech companies to do more to police online content.

The latest round of complaints against Microsoft comes at a sensitive time for the company. It is seeking approval for one of its biggest deals ever with the $75 billion acquisition of game developer Activision Blizzard Inc., which is also facing scrutiny from regulators.

On Thursday, Microsoft President Brad Smith is due to meet with EU digital-policy and antitrust czar Margrethe Vestager. The European Commission said the meeting would take place online and cover “issues of the digital portfolio”.

The Wall Street Journal reported that the US Federal Trade Commission is looking into whether the Activision deal will significantly reduce competition in the gaming market. The FTC is led by Chairman Leena Khan, who has taken steps to increase the investigation into the acquisition.

OVHcloud, which was listed in Paris last year, has faced stiff competition from US cloud-service providers.

While the European cloud market is growing, much of that growth has gone to the three largest US cloud vendors, Microsoft, Amazon and Google Cloud. All three of them now account for 69% of the European cloud market, according to Synergy Research Group. Synergy said Deutsche Telekom is the largest European cloud provider with only a 2% share in the European market, followed by OVHCloud with a 1% share.

It has been difficult for European cloud companies to compete with the expansion and pace of US cloud companies, said John Dinsdale, chief analyst at Synergy, adding that all three are investing tens of billions in their cloud operations every quarter.

“This is in stark contrast to local European cloud providers,” said Mr. Dinsdale.