Microsoft has responded to concerns raised in the UK Competition and Markets Authority’s (CMA) investigation into cloud services and licensing, standing firm that its terms of service do not significantly increase the costs of rival cloud services. The people of Redmond reinforced their position by saying that Amazon is still the market leader in the United Kingdom, while Google’s cloud business is also growing year by year, so no competitive distortion effect can be declared.
In the case of Google, you can see really significant results in the last year. For many years, Alphabet has only observed from afar how the two big guns of the global cloud service segment, Amazon and Microsoft, divide the market between themselves, but at the same time, at the price of persistent work – and quite a bit of investment – the company has now achieved that instead of the previous two the field should consist of three leading teams.
Based on the company’s second quarter business report published a few days ago, at least the Google Cloud business reached an important milestone at the end of June, around the same time when Alphabet’s value exceeded two trillion dollars for the first time. At the same time, the company’s sales revenue from cloud services broke through the psychological limit of ten billion dollars for the first time during the quarter, while the operating profit also came slightly closer to the psychological one billion dollars (the unaudited closing value was $1.172 billion).
However, emphasizing the achievements of rivals may not be convincing enough from Microsoft. The main focus of the case remains that customers can use Microsoft services cheaper within the Azure service than from other rival clouds, and the transition process from the service is also taking place in difficult terrain. The vehement position of the people of Redmond in this regard is that it is also beneficial for AWS and Google to be able to run their software at all, and of course the IP licenses issued to them mean additional income for Microsoft.
According to a Google Cloud spokesperson, restrictive licensing practices are reducing customer choice and hindering innovation, which is one of the main drivers of cloud in the UK.
Amazon cited an estimate in a study published in 2023 that the first-year additional cost to customers in Europe from repurchasing existing BYOL Microsoft 365 software licenses after switching to a third-party cloud service was around €560 million.
Another estimate from the study is that licensing restrictions on Microsoft SQL Server could result in a relative price increase of up to 300 percent for customers who choose non-Azure cloud infrastructure.
In recent weeks, CISPE, the professional association of European cloud infrastructure providers, reached a common denominator with Microsoft, so the software giant avoided a potentially costly EU case. The Redmond giant has pledged to make further changes to its cloud licensing practices, and CISPE is withdrawing its complaint.
The previously filed complaint also came up with the already familiar accusations: it attacked the software manufacturer’s cloud licensing practices with the accusation that Microsoft made it difficult for its customers to change service providers and locked them too much into the Azure ecosystem, and that this practice had a distorting effect on competition.
CISPE eventually reached agreements with Microsoft that allowed European service providers to use enhanced Azure features and to offer Microsoft products and services on their local cloud infrastructures. Microsoft also reached a cash settlement with CISPE worth about $11 million, according to people familiar with the deal. Microsoft has also undertaken to work with CISPE members to further develop the Azure HCI Stack, adapted to the needs of European cloud providers, which offers, for example, a multi-session virtual desktop infrastructure based on Windows 11, free extended security updates and the possibility of paid licensing of SQL Server then.
In 2022, the association asked the European Commission to launch a formal investigation because, in its opinion, Microsoft is “irreparably damaging the European cloud ecosystem and depriving European consumers of real choices.”
Source: www.hwsw.hu
