Microsoft strikes $22 million deal to settle cloud-related complaint to fend off regulators

By Foo Yun Chee

BRUSSELS (Reuters) – Microsoft has reached a 20 million euro ($21.7 million) settlement of an antitrust complaint over its cloud computing licensing practices, helping it avoid a European Union antitrust investigation and a potential hefty fine.

Cloud services organization CISPE, whose members include Amazon and dozens of small cloud providers in the EU, filed a complaint with the European Commission in late 2022, alleging that the contractual conditions imposed by Microsoft on October 1 harm the European cloud computing ecosystem.

Microsoft is behind market leader Amazon in the multibillion-dollar cloud computing sector but ahead of Alphabet’s Google, an industry that has faced antitrust scrutiny on both sides of the Atlantic.

“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 bring even more competition to the cloud computing market in Europe and beyond,” said Microsoft CEO Brad Smith.

Microsoft will develop a product that will allow CISPE members to run Microsoft software on their platforms on the US tech giant’s Azure cloud infrastructure, at prices equivalent to Microsoft’s, CISPE said. It has nine months to deliver.

Microsoft will also compensate CISPE members for lost revenue related to licensing costs over the past two years, the group said. Financial details were not disclosed.

Microsoft has offered a total of about 20 million euros, two people with direct knowledge of the matter told Reuters.

The settlement does not cover Amazon Web Services (AWS), Google Cloud Platform, and AliCloud, which has drawn criticism from the first two companies.

“We continue to support the growing number of customers, vendors, and regulators around the world who are calling on Microsoft to end its discriminatory practices against all customers,” an AWS spokesperson said.

Google Cloud chief says he hopes regulators elsewhere will continue to investigate Microsoft’s licensing practices

“Multiple regulatory bodies have launched investigations into Microsoft’s licensing practices and we are hopeful that remedies will be found to protect the cloud services market from Microsoft’s anti-competitive behavior,” said Amit Zavery.

“We are considering our options to continue to fight Microsoft’s anti-competitive licensing to promote choice, innovation and the growth of the digital economy in Europe.”

CISPE said it would withdraw its complaint to the EU and would not initiate or support complaints on these issues in Europe or elsewhere.

“This agreement will ensure a level playing field for European cloud infrastructure service providers and their customers,” said CISPE Secretary General Francisco Mingorance.

(1 dollar = 0.9240 euros)

(Reporting by Foo Yun Chee; Editing by Christina Fincher and Mark Potter)