Microsoft not out of EU anti-trust woods despite deals with OVHcloud, CISPE

Microsoft has realized that every cloud, not just Microsoft Azure, has a silver lining, and that many clients use other cloud services, so it makes sense not to limit their market, UK-based analyst Phil Brunkard said today.

Brunkard, executive counselor at Info-Tech Research Group, UK, was reacting to recent news that the company had reached an agreement with French cloud provider OVHcloud that led to the dropping of an anti-trust complaint that had been filed with European Union regulators. On July 11, there was a similar announcement, this time with the Association of Cloud Infrastructure Service Providers (CISPE).

The cloud vendors first raised concerns in 2022, after they said their customers were “asked to pay more to run Microsoft software in non-Microsoft cloud environments, under what they saw as restrictive cloud licensing policies.”

In March 2023, the company reportedly agreed to change its cloud computing practices in to avoid an antitrust probe from the European Commission, the EU’s antitrust authority. Despite that, CISPE said it still planned to pursue the complaint, with a spokesperson telling Reuters that “we have had an initial discussion with Microsoft, but have not seen anything that suggests changes that will ensure that all European customers have the chance to run the software they want in the cloud of their choice free of unfair licence terms or discriminatory pricing.”

A statement released by CISPE on July 11, the day after the settlement was reached, said,  “Microsoft has committed to  make certain changes to address the claims made by European CISPE members and as a result, CISPE will withdraw its complaint against Microsoft.”

Still outstanding is a complaint by the Spanish Startup Association filed with the National Markets and Competition Commission (CNMC), an independent regulator in Spain. According to a statement, “this action arises in response to the restrictive practices observed in the cloud services market, which are significantly affecting both cloud providers and clients within the startup ecosystem in Spain.”

Recent deals with OVHcloud and CISPE, said Brunkard, “seem like strategic moves to address antitrust issues in Europe. The OVHcloud agreement makes it easier to use Microsoft solutions on different cloud providers, showing a potential step towards more openness. The CISPE deal, which includes changes to software licensing and a hefty payment, aims to boost competition and avoid an EU investigation. However, even with these deals, Microsoft is still under the microscope, especially in Spain.”

These settlements, he said, “show just how much Microsoft has at stake in staying compliant and keeping its lead in the changing European market. Even as Microsoft softens its approach to antitrust challenges, it’s clear they are still playing hard to maintain their market dominance.”

Dario Maisto, senior analyst at Forrester, who covers public cloud vendors in EMEA, said, “on July 10 Microsoft had already made it into the news for paying €20 million to settle a dispute with CISPE and European cloud providers on an existing antitrust complaint. The settlement, however, did not include big players such as Amazon Web Services (AWS), Google Cloud, or Alibaba’s AliCloud.”

It is, he said, “not surprising that OVHCloud has reportedly reached an agreement with Microsoft to drop its antitrust complaint to European Union regulators though. European cloud vendors do have a more cooperative, rather than competitive approach with hyperscalers, while we see the opposite when it comes to global cloud vendors. With these latter, the competition is still fierce and there seems to be less space for settlements.”

According to Maisto, the fact that the Spanish Association of Startups denounces Microsoft’s anti-competitive practices in the cloud market is “more interesting as, according to the news, Microsoft would be imposing artificial barriers that limit the ability of startups to compete fairly and competitively.”

Any restriction to competition, he said, is “always detrimental in the cloud market, where exactly the strong competition among the existing players has been encouraging a healthy progression in terms of innovation from hyperscalers and other cloud vendors, which is benefiting the overall ecosystem of startups and end-user clients.”

Though they might seem similar, the scope of the two forms of complaint is very different, he said, adding, “in the OVHCloud and CISPE case, we have a handful of cloud vendors trying to gain market share, or at least not being prevented from playing in a fair competitive field. In the Spanish and other similar cases, there is a concern that startups and other companies may not leverage the best technologies and cloud environments because of Microsoft’s practices.”

Maisto said, “in this latter case we could — and will — see more activism from European governments to defend the prerogatives of national organizations in the face of big tech’s increasing power. This also changes the nature of the business for Microsoft and other hyperscalers as they promote their government cloud services and may want to avoid litigation of any kind with European governments.”