Microsoft reaches deal with cloud providers, ending EU antitrust dispute

Microsoft has reached a settlement with cloud service providers after a two-year dispute over its licensing practices,

The deal, which was recently struck with cloud industry association CISPE (backed by Microsoft rival Amazon), aims to persuade EU regulators to drop an antitrust complaint against Microsoft.

CISPE Secretary General Francisco Mingorance expressed optimism about the agreement, stating: “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.” As part of the settlement, CISPE will withdraw its November 2022 complaint to the European Commission and commit not to file or support similar complaints in the EU or elsewhere.

In return, Microsoft has agreed to change some of its software licensing practices within nine months. The tech giant will also make a one-time payment to CISPE and cover the costs of its legal proceedings and campaign. Notably, Amazon “will not benefit from or be bound by these terms,” according to CISPE.

An Amazon Web Services spokesperson criticized the settlement, saying it offered only limited concessions. “Unfortunately, this settlement does nothing for the vast majority of Microsoft customers who are unable to use the cloud of their choice in Europe and around the world,” the spokesperson said. Amazon continues to support others “who are calling on Microsoft to end its discriminatory practices against all customers.”

Microsoft CEO Brad Smith welcomed the resolution, stating: “I am pleased that we have not only addressed their past concerns, but also worked together to define a path forward that brings even more competition to the cloud computing market in Europe and beyond.”

The settlement follows similar agreements Microsoft has reached with other cloud companies, including OVHcloud, Aruba and the Danish Cloud Association, to resolve separate antitrust complaints.

Ongoing Regulatory Challenges

The resolution comes amid growing regulatory scrutiny of Microsoft in Europe, as the company faces mounting pressure from regulators, including a British investigation into its cloud services.

The European Commission recently accused Microsoft of violating EU antitrust rules by bundling its Teams messaging app with its popular Office suite, following an investigation launched last year that was prompted by a complaint filed in 2020 by Slack.

In response to these concerns, Microsoft has made efforts to separate Teams in Europe and globally. The company also made “improvements” in September 2023 to increase interoperability with competitors. However, the Commission found that these changes were insufficient to fully address its concerns.

EU Competition Commissioner Margrethe Vestager stressed that “Microsoft now has the opportunity to respond to our concerns.” Brad Smith indicated Microsoft’s willingness to take further steps, stating: “Following the separation of Teams and the initial steps taken on interoperability, we appreciate the additional clarity provided today and will work to find solutions that address the Commission’s remaining concerns.”

Wider implications and future prospects

The ongoing regulatory pressure extends beyond the cloud services dispute. EU regulators are also investigating Microsoft’s partnership with OpenAI, the company behind ChatGPT, to determine whether it constitutes a merger in disguise.

In the face of regulatory challenges, Microsoft has expressed its willingness to work with authorities to find solutions that address competition concerns while allowing continued innovation in a rapidly changing technology environment.

The resolution of the cloud dispute marks a significant step for Microsoft in addressing antitrust concerns in Europe. But the company continues to face scrutiny on multiple fronts, underscoring the complex regulatory environment for tech giants in the EU and around the world.

(Photo by Matthew Manuel)

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Tags: cloud, europe, microsoft