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Microsoft brokers team up with European cloud lobby, avoiding EU antitrust investigation

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Brief description of the dive:

  • Cloud Infrastructure Service Providers in Europe, a lobbying group, will withdraw its antitrust complaint against Microsoft as part of an agreement announced on Wednesday, CISPE said in a statement.
  • The agreement between the two organizations gives the vendor nine months to develop an enhanced Azure Stack HCI solution that will enable European cloud service providers to offer Microsoft applications and services on their on-premises cloud infrastructures.
  • The trade body has set up a European Cloud Observatory to monitor the rollout and will reactivate the competition complaint if the conditions are not met. The original complaint was filed with the European Commission in November 2022. Microsoft competitor AWS, CISPE the organization said the member had been excluded from pre-contract negotiations.

Diving Insight:

Microsoft is fending off regulatory scrutiny and possible legal action on multiple fronts over the company’s software licensing practices and their impact on competition in the massive, growing public cloud market.

The European Commission found that the company’s bundling of Teams with Office 365 and Microsoft 365 violated European Union antitrust rules in a preliminary ruling published last month. Microsoft unsuccessfully tried to head off the investigation by separating the collaboration tool from its productivity solutions in Europe last summer and globally in April.

Microsoft is also the target of a U.S. Federal Trade Commission investigation into competition in the cloud services market that began in March 2023. Google Cloud, a young player in the fight for dominance in the hyperscaler market, filed a complaint with the FTC accusing Microsoft of using its dominant position in the enterprise software market to steer customers toward Azure and other Microsoft cloud services a little over a year ago.

The vendor is also under scrutiny for vendor lock-in in the UK. In May, the Competition and Markets Authority identified potential structural and technical barriers to multicloud adoption in business practices used by Microsoft, AWS and Google Cloud.

Under the terms of the CISPE agreement, Microsoft agreed to pay a lump sum to CISPE to cover the costs of its litigation and fair software licensing campaigns over the past three years.

Microsoft declined to provide further details about the deal in an email to CIO Dive. Instead, it provided a statement from Microsoft CEO Brad Smith.

“After more than a year of working with CISPE and its European members, I am pleased that we have not only addressed their concerns of the past, but together we have charted a path forward that will further enhance competition in the cloud computing market in Europe and beyond,” said Smith.

Francisco Mingorance, CISPE’s secretary general, characterized the settlement as “a significant victory for European cloud service providers” in a statement Wednesday. “CISPE has given Microsoft the benefit of the doubt and believes that this agreement will provide a level playing field for European cloud infrastructure service providers and their customers.”