Google has held Microsoft responsible for practicing anti-competitive behavior to entrap customers in its cloud computing services.
It has formally complained to the United States Federal Trade Commission (FTC). The objection follows the FTC’s March 2022’s solicitation for comments on business practices in the cloud computing industry.
Google has written a formal letter mentioning that Microsoft software licensing restrictions are unfair. The claim can’t be marked as vague for good reasons. Approximately 20 years ago, Windows Biz was found to be engaged in illicit anti-competitive activities concerning personal computers.
Given this, it is not rational to blow off the possibility that Microsoft is repeating history.
The Deliberate Exploitation
Google’s letter has criticized Microsoft’s strategy of leveraging its Windows server and Office products to retain Azure customers. It further contends that Microsoft’s dominance poses a threat to national security.
This is not the first grievance Google has raised. It had echoed similar grievances to European regulators earlier this month.
Microsoft essentially imposes additional fees on third-party cloud providers for using its software. This cost doesn’t pass on to customers if they use the same software on Microsoft’s Azure platform.
Besides Google, several industry experts have voiced concerns in this context. For instance, Coalition for Fair Software Licensing (CFSL), a lobbying group backed by unidentified IT firms, claimed that the situation stemmed from Microsoft’s licensing modification in 2019.
The firm also stated that the change left customers with two undesirable options.
They could either forsake their existing licenses and bear an additional cost to use their preferred provider or shift to Microsoft’s cloud services and transfer their previously purchased licenses to cloud-based subscriptions.
The latter option doesn’t involve any additional cost.
Corey Quinn, the Chief Cloud Economist at The Duckbill Group, has also voiced his concern. He reported an industry trend towards making switching providers extraordinarily costly and challenging.
Quinn has also stated that a shift away from customer retention through innovation and satisfaction has occurred. It has been replaced with business strategies that amplify migration hardships and cultivate some sort of customer dependency.
Some parts of this lock-in strategy include expensive data egress fees, specific security and identity abstractions, and contractual disincentives.
MS is Not The Sole Villain
The alleged anti-competitive practices are not solely attributed to Microsoft. In the 2020 report on competition in digital markets, the US House Subcommittee on Antitrust noted similar concerns across various cloud platforms.
This event reflects the growing international scrutiny of major technology firms and their business practices.
The report highlighted the possibility of cloud infrastructure providers’ preference for their products. It explains that such providers leverage lucrative discounts and offers to create a challenging competitive environment for third-party vendors.
The Cloud Infrastructure Service Provider of Europe (CISPE), which includes AWS as a member, has also questioned Microsoft’s conduct. It complained to Microsoft in November, and the litigation is ongoing.
Google’s allegations against Microsoft signal a potential turning point in the ongoing cloud wars. Microsoft, however, has not publicly responded to the claims.