Mole quarrel: Google reports Microsoft to the EU for antitrust violations

Google reported Microsoft to the EU on Wednesday, claiming that Microsoft is illegally exploiting its dominant position in the Windows market to force companies to use the Azure cloud service, or pay 400 percent higher prices and be denied upgrades and security updates.

According to the complaint, Microsoft only penalizes companies if they try to use products from three competitors: Google, AWS, and Alibaba. Cloud. Google claims that Microsoft’s practices constitute “an artificial and arbitrary financial penalty for not using Azure.” If these penalties were intended to generate revenue through Microsoft’s intellectual property, they would apply to all non-Azure cloud providers, not just Azure’s main competitors.

Google elaborates on its reasons for the notification in a blog post. Read the full blog post here.

“For years, Microsoft has locked customers into Teams, even when they preferred other vendors, particularly in productivity software. Now the company is using the same tactic to drive businesses to Azure, its cloud platform. Microsoft’s licensing terms prevent European customers from moving their current Microsoft workloads to competitors’ cloud – despite there being no technical barriers to doing so – or impose a significant price increase of 400 percent,” Google says in its blog post, signed by Amit Zavery, GM/VP of Google Cloud, and Tara Brady, President of Google Cloud EMEA.

“Microsoft is the only cloud provider to use these tactics, which have caused significant damage to European businesses and governments. They have not only cost European businesses at least €1 billion per year, but have also led to negative downstream effects, including wasted tax dollars, stifled competition, restrictions on distributors and channel partners, and increased risk for organizations exposed to Microsoft’s ‘inadequate’ security culture,” Google adds.

Google points out that Microsoft hasn’t always acted this way. “Until 2019, customers could migrate to any cloud provider’s dedicated infrastructure, but this created a problem for Microsoft: How could it force customers to choose Azure over a competitor?” Google’s filing states. “Microsoft’s response was to exploit customers’ reliance on products like Windows Server by imposing large penalties for using on-premises software with Azure rivals.”

Google says Microsoft is using marketing tricks. Microsoft allegedly advertised that competing offerings are “up to five times more expensive than Azure for Windows Server and SQL Server,” which Google claims is misleading, given that it is Microsoft themselves who imposes these penalties to create this price difference.

Microsoft responds in an email, but does not comment on the details of Google's complaint, and predicts that the EU will not be convinced. Read Microsoft's statement here.

“Microsoft has resolved similar issues raised by European cloud providers in a constructive manner, even after Google attempted to sue them. Having failed to convince European companies, we expect Google to similarly fail to convince the European Commission,” Microsoft said.

Dave McCarthy, research director for cloud and edge services at IDC, sees the background to Google’s complaints as part of a larger trend in the cloud industry. “Customers are reevaluating how they build applications in the cloud and who they partner with. This is reflected in the financial growth rates of cloud providers: AWS and Azure have seen growth slow, while Google has accelerated,” says McCarthy.

“While Microsoft may succeed in the short term in incentivizing customers to stick with Azure, the long-term effects of these commercial terms will drive customers to remove that technology from their IT systems to create more choices in the future,” he continues.

Tracy Woo, principal analyst for cloud services at Forrester, is not particularly impressed with Google's complaints, describing them as "a lot of whining." "Google is really upset with Microsoft for not partnering with them, even though they play nice with AWS," Woo says.

“Google is known to be the hardest to work with. They don’t share their roadmaps and are the least open about their data,” says Woo.

For more information on the latest trends in the cloud industry, read this article from TechCrunch or this report from Forrester.