£1B lawsuit targets Microsoft for allegedly overcharging Windows customers on other clouds

Microsoft has been sued in the UK to the tune of more than £1 billion over claims Redmond has been overcharging businesses for Windows Server licenses used on competing cloud platforms. 

The lawsuit, filed today with the UK's Competition Appeal Tribunal by competition lawyer Maria Luisa Stasi through the firm Scott+Scott, said the complaint is on behalf of the thousands of UK businesses and organizations that were allegedly overcharged by Microsoft when purchasing licenses for Windows Server on AWS, Google Cloud Platform and Alibaba Cloud. The £1 billion figure is what affected businesses are collectively owed in compensation for overcharges, according to the filing. 

"Put simply, Microsoft is punishing UK businesses and organisations for using Google, Amazon and Alibaba for cloud computing by forcing them to pay more money for Windows Server," said Stasi, a lawyer representing the alleged victims of Microsoft's excess pricing scheme.

While a spokesperson for Scott+Scott told us specifics of the overage charges aren't available at this point, with the suit still under review by the Tribunal, the firm's statement does mention that the overcharges were enough that a small business would be paying more for licensing Windows Server on AWS, GCP or Alibaba than if they simply ditched competitor cloud hosting for Azure. 

"This lawsuit aims to challenge Microsoft's anti-competitive behaviour, push them to reveal exactly how much businesses in the UK have been illegally penalised, and return the money to organisations that have been unfairly overcharged," Stasi added. 

Scott+Scott explained further that Microsoft knows how reliant businesses in the UK are on products like Windows Server, and uses that market dominance to extract higher prices from customers who refuse to simply abandon competitors for its own services. 

"Microsoft is by far the dominant player in desktop operating systems with a market share of between 70-80%, according to the CMA [Competition and Markets Authority]," the firm said. 

Stop me if you've heard this one …

This might be a first attempt to claw damages out of Redmond for its alleged ripping off of customers using Microsoft products on competitors' clouds, but it's hardly the first such complaint the tech giant has dealt with. 

UK telecom regulator Ofcom referred both Amazon and Microsoft to the CMA in October 2023 for investigations into potential anti-competitive practices. This referral followed findings earlier in the year that raised concerns about unfair software licensing terms, with a significant focus on Microsoft.

Part of the many complaints the CMA said it received included - you guessed it - discriminatory pricing of Microsoft products on clouds other than Azure.

• Microsoft's CISPE settlement includes a suspension of audits for members
• Germany is monitoring Microsoft to thwart 'anti-competitive practices'
• Admins wonder if the cloud was such a good idea after all
• Microsoft informed of yet another antitrust probe by US authorities

Microsoft also settled a complaint from the Cloud Infrastructure Service Provider of Europe (CISPE) trade group filed with the European Commission over the summer for somewhere in the 10-30 million Euro range. That case, unsurprisingly, also had to do with Microsoft imposing unfair licensing terms or fees to other cloud providers to run Microsoft software. 

Google, which tried and failed to get CISPE to reject the settlement with Microsoft before going its own way and allegedly forming a lobbying group called the Open Cloud Coalition (OCC) that the Windows maker has referred to as an "astroturfing" operation, filed its own complaint against Microsoft with the EC in September, again for overcharging customers for Windows Server on its and other non-Microsoft clouds. 

Google claimed Microsoft marked prices up by 400 percent for customers on GCP, AWS, and other cloud services. The current status of Google's Microsoft complaint is unclear, with no indication that the matter has moved forward since being filed a little over two months ago. The European Commission didn't immediately respond to a request for comment. 

Nicky Stewart, a Senior Advisor to the Open Cloud Coalition, told The Register in a statement, “Unfair software licensing practices, like those highlighted in this case, are a significant challenge for cloud providers, disproportionately harming competition and innovation across the cloud ecosystem. Decisive action is needed to address these licensing practices and promote fair competition for the benefit of businesses and consumers alike.”

Microsoft declined to comment. On Wednesday, however, it announced the prices it charges in British Pounds will fall between five and six percent due to its policy of reflecting currency exchange rate changes in local currency pricing. ®