Microsoft's cloud services facing antitrust complaint in Europe

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A French cloud computing firm OVH Groupe SAS has filed an antitrust lawsuit in Europe against Microsoft, adding to previous criticism of the company's competitive tactics at a time when other tech titans have been subjected to increased public scrutiny.

Days ago, the European Union and the UK have opened formal antitrust investigations into whether Facebook's owner, Meta Platforms Inc., and Google sought to illegally cooperate in digital advertising. This would be a rare instance in which major state actors probe two tech giants from Silicon Valley to foil competitors. 

Tech regulators have grown increasingly concerned with big tech regarding anti-trust issues and anticompetitive behavior, tax payment, privacy matters, data handling, and more. 

The complaint was filed with the European Commission, the European Union's top competition authority, according to OVHcloud. According to persons familiar with the case, the complaint focuses on how Microsoft licenses its goods, such as its Office productivity suite, which may make it more expensive to utilize cloud services that compete with Microsoft's Azure cloud.

OVH filed the suit last summer but it was not previously reported on. It alleges that Microsoft's software hinders competition by impeding its performance on other cloud services.

A spokesperson for OVHcloud said, “Through abusing its dominant position, Microsoft undermines fair competition and limits consumer choice in the cloud computing services market."

A Microsoft spokesperson declined to clarify whether the company had been alerted of the allegation but stated that European cloud firms are developing successful businesses with Microsoft technology.

In a statement, the spokesperson said, “Cloud providers enjoy many options to provide cloud services to their customers using Microsoft software, whether purchased by the customer or the partner," adding that “we’re continuously evaluating how we can best support partners and make Microsoft software available to customers across all environments, including those of other cloud providers.”

OVHcloud divulged that other companies had also filed a suit along with them, without naming any.

Microsoft has for some time been out of the spotlight amid governments going after large tech giants. The corporation has positioned itself as having learned from its own antitrust battles, which occurred two decades ago when the US Department of Justice and the European Union sued the company for its business practices.

The majority of government investigation has focused on the other four major US internet behemoths: Facebook-owner Meta Platforms Inc., Google-parent Alphabet Inc., Apple Inc., and Amazon.com Inc. A 2020 report by the United States House Antitrust Subcommittee, for example, focused its 16-month investigation on the market strength of the other four corporations, rather than Microsoft.

European policymakers and politicians have recently pushed to tighten regulation of the cloud business. Despite the fact that Microsoft does not have a dominating cloud market share, there is worry about the corporation combining its past strengths in areas such as commercial applications with its rapidly developing cloud business. Microsoft came into difficulties in the 1990s for bundling methods in its operating system.

Two other recent European accusations stipulate that Microsoft is anticompetitively bundling cloud goods. Slack Technologies Inc., a San Francisco-based business-messaging service, protested to the EU in 2020 about Microsoft's bundling of its rival Teams workplace-collaboration program with its popular Office software. Last year, Nextcloud, a German cloud-storage business, filed a complaint with the EU regarding Microsoft's bundling of its OneDrive storage offering with its Windows operating system.

Following the public release of Nextcloud's complaint, the firm formed a coalition with other European enterprises and non-profits to call Microsoft out.

The EU is presently considering legislation that would designate many big US-based corporations, including Microsoft, as "gatekeepers" who would be required to follow a new set of standards in how they interact with competitors and customers. A second proposed rule would require computer firms to do more to monitor internet material.

Microsoft President Brad Smith will meet with Margrethe Vestager, the EU's digital-policy and antitrust watchdog, on Thursday. According to the European Commission, the conference will be held online and will focus on "issues within the digital portfolio."

OVHcloud, which went public in Paris last year, has faced fierce competition from cloud-service companies in the US.

While the European cloud industry is expanding, much of that expansion has gone to the three major cloud suppliers in the United States, Microsoft, Amazon, and Google Cloud. According to Synergy Research Group, these three companies currently account for 69% of the European cloud market. According to Synergy, Deutsche Telekom is the largest European cloud provider with a 2% share of the European market, followed by OVHcloud with a 1% share.

According to Synergy chief analyst John Dinsdale, it has been challenging for European cloud businesses to compete with US companies, despite the fact that all three are investing tens of billions of dollars into their cloud operations every quarter.