Microsoft has agreed to a €20 million ($21.7m) deal to settle an EU antitrust complaint from European cloud providers association CISPE relating to licensing of its cloud products.
CISPE, the Cloud Infrastructure Services Providers in Europe, represents European cloud providers and also counts Amazon among its members. It filed the complaint in late 2022 arguing that Microsoft's contracts were harming Europe's cloud computing market.
"After working with CISPE and its European members for more than a year, I am 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," Microsoft president Brad Smith said.
Francisco Mingorance, secretary general of CISPE, described the deal as a "significant victory" for European cloud providers.
"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," Mingorance said. "Microsoft has nine-months to make good on its commitment by offering solutions that allow fair licensing terms for its productivity software European cloud infrastructures."
In addition to paying almost $22 million, Microsoft will develop a product - Azure Stack HCI for European cloud providers (Hosters) - that enables CISPE's members to run Microsoft software on their platforms at equivalent prices to Microsoft's.
CISPE will establish an independent European Cloud Observatory to monitor the development of this product.
The company will also compensate CISPE members for lost revenues related to their licensing costs for the last two years.
The settlement, however, does not include Amazon Web Services (AWS), Google Cloud, or Alibaba's AliCloud.
AWS spokesperson Alia Ilyas said that Microsoft was only making “limited concessions for some CISPE members that demonstrate there are no technical barriers preventing it from doing what’s right for every cloud customer.” Ilyas added it would “nothing for the vast majority of Microsoft customers who are still unable to use the cloud of their choice in Europe and around the world.”
Amit Zavery, head of platform at Google Cloud, added: "Many regulatory bodies have opened inquiries into Microsoft's licensing practices, and we are hopeful there will be remedies to protect the cloud market from Microsoft's anti-competitive behavior.
"We are exploring our options to continue to fight against Microsoft’s anti-competitive licensing in order to promote choice, innovation, and the growth of the digital economy in Europe."
Mark Boost, CEO of UK-based cloud company Civo is similarly disappointed in the outcome.
Boost said the deal is "not good news" for the cloud industry, and added several important questions still need to be answered.
"We need to know more about how the process of compensation will work," he said. "Will all cloud providers in Europe be compensated, or just CISPE members? Is this a process that will be arbitrated by Microsoft? Where are the regulators in this?"
Boost added that the deal will benefit CISPE members only in the short term, but that the cloud industry and its customers will pay the price in the long-term.
" However they position it, we cannot shy away from what this deal appears to be: a global powerful company paying for the silence of a trade body, and avoiding having to make fundamental changes to their software licensing practices on a global basis," he said.
CISPE is now set to withdraw its EU complaint and will not support similar complaints globally.
While the CISPE antitrust filing was officially made in November 2022, its origins go back to the summer of 2021 when OVHcloud first made a complaint, which was disclosed in March 2022. In April, Aruba joined and CISPE announced that it would be backing the antitrust case.
In May 2022, Microsoft promised to adjust its cloud licenses to avoid a full-scale antitrust investigation by the EU, though it did not fully endorse the 10 CISPE "Fair Software Licensing" principles.
The investigation was ongoing throughout 2023, and in February 2024 Microsoft opened talks with CISPE in an attempt to resolve its concerns. At that time, CISPE stated that "substantive progress must be achieved in the first quarter of 2024," with Mingorance adding: "Every passing day without resolution further undermines the viability of Europe’s cloud infrastructure sector and restricts the cloud options available to European customers."
By June 2023, reports emerged suggesting that Microsoft was nearing a multi-million-euro agreement to pay off the CISPE complaint. CISPE vehemently denied this, telling DCD via email that the rumors were incorrect and "probably falsely spread by competitors of Microsoft."
While the CISPE complaint may now be resolved, Microsoft remains under scrutiny in other jurisdictions for similar reasons.
In the UK, the CMA is conducting an investigation into the cloud computing market that kicked off in October 2023, while in the US the company is part of two investigations by the Federal Trade Commission.
The first commenced in January 2024 and is looking into AI services provided by companies including Amazon, Alphabet, Microsoft, Anthropic, and OpenAI, focusing on the investments and partnerships being formed.
The second probe focuses on Microsoft, OpenAI, and Nvidia and is looking at the companies' conduct and influence on the AI industry.
Earlier this month, Microsoft settled a $14.4m lawsuit with the Civil Rights Department regarding accusations that the company was discriminating against employees based on protected leave including parental, disability, pregnancy, and family care leave.
