Google paid $512 million to thwart Microsoft’s antitrust actions

Date:

July 16, 2024

Microsoft has successfully concluded an ongoing antitrust investigation into its licensing practices alleged by CISPE.

The tech giants are going head-to-head to achieve leadership in the cloud infrastructure services landscape. Google has offered a group of EU-based cloud companies a $512 million payment to continue fighting its ongoing case against Microsoft. The Cloud Infrastructure Services Providers of Europe (CISPE) withdrew the case after settling a deal with Microsoft out of court.

CISPE claimed that Microsoft had made it harder for its organisational customers to switch service providers by forcing them to bundle their business software with Azure Cloud Services. With the case in its final stages and with a good chance of winning the case under the European Commission’s revised Digital Markets Act 2023, the union accepted Microsoft’s offer, which ended the case.

According to confidential documents read by members directly involved, Google offered a conditional sum to maintain the EU complaint, as a means of strengthening its position in the European market. The package was not directly monetary, but offered licenses for Google’s Cloud Technology software for the next 5 years, totaling €455 million. The continuation of the case was also financially strengthened by a $6 million settlement from Amazon Web Services against Microsoft’s abuses.

CISPE comprises a group of European companies that have chosen to act out of court to gain access to enhanced Microsoft Azure capabilities. CISPE service providers can also offer Microsoft applications and services on their local cloud infrastructures. The offer is also supported by a financial contribution of €10 million from Microsoft to the Association. Microsoft AWS is an active voluntary donor and one of the founding members of CISPE. Companies from every major industry have long supported trade associations in similar ways.

Google is third after Microsoft, and Amazon is second in the cloud market. But its Google Cloud Services wing has gained impressive momentum over the past two years, posting a first-quarter profit of $900 million. Google is seen by global business leaders as a top bet as its core advertising business matures.

If the settlement fails and CISPE wins, Microsoft’s fines would total 10% of its annual sales, a sum far greater than the GDP of many developing countries combined. The struggle to thrive in the saturated, high-cost cloud services market has made Google’s move skeptical among the public. It could spark antitrust sentiment among users, from major companies choosing other cloud services to end consumers switching to Google search alternatives.