Microsoft has signed a settlement with cloud providers after a two-year dispute over its licensing practices,
The agreement, which brokered recently with the cloud association CISPE (which is backed by Amazon, Microsoft’s rival), is intended to lead EU regulators to drop an antitrust complaint they filed against Microsoft.
CISPE’s Secretary General, Francisco Mingorance, expressed optimism about the agreement, stating, “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.” As part of the settlement, CISPE will withdraw its November 2022 complaint to the European Commission and pledge not to make or support similar complaints in the EU or elsewhere.
In return, Microsoft has committed to modifying some of its software licensing practices within nine months. The tech giant will also make a lump sum payment to CISPE and cover its litigation and campaign costs. Notably, Amazon “will neither benefit from nor be bound by these terms,” according to CISPE.
An Amazon Web Services spokesperson criticised the settlement, arguing it offers only limited concessions. “Unfortunately, this settlement does nothing for the vast majority of Microsoft customers who are unable to use the cloud of their choice in Europe and around the world,” the spokesperson said. Amazon continues to stand with others “who are calling on Microsoft to end its discriminatory practices for all customers.”
Microsoft President Brad Smith welcomed the resolution, stating, “I’m 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.”
This settlement follows similar agreements Microsoft has made with other cloud companies like OVHcloud, Aruba, and the Danish cloud association to resolve separate antitrust complaints.
Ongoing regulatory challenges
The resolution comes amid increasing regulatory scrutiny of Microsoft across Europe. The company has faced mounting pressure from regulators, including a UK investigation into cloud services.
Recently, the European Commission accused Microsoft of violating EU antitrust rules by bundling its Teams communications app with its popular Office suite. This charge followed a probe launched last year, triggered by a 2020 complaint from Slack.
In response to these concerns, Microsoft has made efforts to unbundle Teams in Europe and globally. The company also introduced “improvements” in September 2023 to enhance interoperability with competitors. However, the Commission stated that these changes were insufficient to address its concerns fully.
EU Competition Commissioner Margrethe Vestager emphasised that “Microsoft now has the opportunity to reply to our concerns.” Brad Smith indicated Microsoft’s willingness to take further steps, stating, “Having unbundled Teams and taken initial interoperability steps, we appreciate the additional clarity provided today and will work to find solutions to address the Commission’s remaining concerns.”
Broader implications and future outlook
The ongoing regulatory pressure extends beyond the cloud services dispute. EU regulators are also examining Microsoft’s partnership with OpenAI, the company behind ChatGPT, to determine if it constitutes a disguised merger.
As Microsoft navigates these regulatory challenges, the company has expressed a commitment to working with authorities to find solutions that address competition concerns while continuing to innovate in the rapidly evolving tech landscape.
The resolution of the cloud services dispute marks a significant step for Microsoft in addressing antitrust concerns in Europe. However, the company still faces scrutiny on multiple fronts, highlighting the complex regulatory environment for tech giants in the EU and globally.
(Photo by Matthew Manuel)
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