Microsoft agrees to €20 million settlement with CISPE

Microsoft has agreed to settle an antitrust complaint with European cloud services watchdog CISPE. The deal will see the tech giant pay €20 million in exchange for the trade body withdrawing a complaint to the European Commission that alleged Microsoft manipulated its software licensing agreements to prevent its cloud customers from switching to other providers. Microsoft will also reset the prices of its software and compensate 27 CISPE members for lost revenue due to the big tech company’s conduct – excluding AWS, AliCloud and Google Cloud.

The agreement will likely head off an EU antitrust investigation and any potential financial penalties resulting from such an investigation. Microsoft President and Vice Chairman Brad Smith praised the agreement. “After more than a year of working with CISPE and its European members, I am pleased that we have not only addressed their concerns from the past,” Smith said, “but also worked together to define a path forward that will bring even greater competition to the cloud computing market in Europe and beyond.”

CISPE has agreed to withdraw its long-running complaint to the European Commission against Microsoft and its conduct in the cloud services market in exchange for €20 million and other terms. (Photo: Shutterstock)

CISPE in two-year battle with Microsoft

CISPE’s complaint about Microsoft’s conduct dates back to 2022, when it alleged the company imposed unfair licensing terms on its members. The industry body — which includes AWS as well as smaller European cloud providers — has also complained publicly, including in this publication, about other alleged anticompetitive behavior by Microsoft in the cloud services market, including self-advantaging and manipulative pricing.

“These practices further tie the customer to the provider, both contractually and technically in terms of portability and switching costs,” said Francisco Mingorance, President of CISPE Technical Monitor“They are facing a situation where any change to the vendor’s infrastructure, or even software, is cost-prohibitive.”

Microsoft has consistently denied engaging in anti-competitive conduct in the European cloud market. “We remain committed to addressing legitimate licensing concerns,” a company spokesperson said in response to CISPE’s original complaint, adding that the company supports “a competitive environment in which all (cloud) providers can thrive.”

Deal criticized by UK cloud experts

CISPE welcomed Microsoft’s settlement. “This agreement,” Mingorance said, “will ensure a level playing field for European cloud infrastructure service providers and their customers.”

The reaction from UK cloud providers was more mixed. Former UKCloud CEO Simon Hansford said the deal raised concerns about the lack of transparency in the wider cloud market and served as an example to the Competition and Markets Authority of how not to correct market imbalances following its investigation into the UK cloud market. For his part, Civo CEO Mark Boost said: Technical Monitor that this agreement did not significantly contribute to weakening the dominance of the three major hyperscale vendors in the global cloud services market.

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“By striking a deal with Microsoft that appears to be exclusive to CISPE members,” Boost said, those companies “will get some short-term benefits, but the cloud industry and their customers will pay the price in the long term. Regardless of how they position it, we cannot avoid what this deal appears to be: a global, powerful company paying for the silence of a trade body and avoiding the need to make fundamental changes to its software licensing practices worldwide.”