Microsoft brokers deal with European cloud lobby, dodges EU antitrust probe

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Dive Brief:

  • Lobbying group Cloud Infrastructure Service Providers in Europe will withdraw its antitrust complaint against Microsoft as part of an agreement announced Wednesday, CISPE said in a statement.
  • The deal between the two organizations gives the provider nine months to stand up an enhanced Azure Stack HCI solution that enables European cloud providers to offer Microsoft applications and services on local cloud infrastructures.
  • The trade organization set up a European Cloud Observatory to monitor the rollout and will reactivate the competition complaint if the terms are not satisfied. The original complaint was filed with the European Commission in November 2022. Microsoft competitor AWS, a CISPE member, was excluded from the negotiations leading up to the agreement, the organization said.

Dive Insight:

Microsoft is fending off regulatory scrutiny and possible legal action on multiple fronts stemming from the company’s software licensing practices and their impact on competition in the massive, growing market for public cloud.

The European Commission said the company’s bundling of Teams with Office 365 and Microsoft 365 violated European Union antitrust laws in a preliminary finding released last month. Microsoft tried unsuccessfully to head off the investigation by decoupling the collaboration tool from the office productivity solutions in Europe last summer and globally in April.

Microsoft is also the target of a U.S. Federal Trade Commission cloud market competition probe launched in March 2023. Google Cloud, a junior player in the battle for hyperscaler dominance, filed a complaint with the FTC accusing Microsoft of using its dominant position in enterprise software to drive customers toward Azure and other Microsoft cloud services just over a year ago.

The provider faces scrutiny for vendor lock-in in the U.K., as well. In May, the Competition and Markets Authority identified potential structural and technical barriers to multicloud adoption in the business practices employed by Microsoft, AWS and Google Cloud.

The terms of the CISPE agreement require Microsoft to pay a lump-sum contribution to CISPE to reimburse the cost of litigation and campaigns for fair software licensing over the past three years.

Microsoft declined to offer further details on the agreement in an email to CIO Dive, and instead shared a statement from Microsoft President Brad Smith.

“After working with CISPE and its European members for more than a year, I am pleased that we’ve not only resolved their concerns of the past, but also worked together to define a path forward that brings even more competition to the cloud computing market in Europe and beyond,” Smith said.

Francisco Mingorance, CISPE’s secretary general, characterized the settlement as a “significant victory for European cloud providers” in a Wednesday statement. “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.”