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Microsoft Accuses Google of Secret Lobbying to Discredit Its Cloud Services in Europe

In a new dispute, Microsoft accuses Google of covert lobbying efforts in Europe to influence cloud market regulations and discredit Microsoft’s cloud strategy.

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Microsoft claims that Google has engaged in undisclosed lobbying campaigns in Europe to discredit Microsoft’s cloud business. In a post by Deputy General Counsel Rima Alaily, Microsoft alleges that Google covertly set up the Open Cloud Coalition, an alliance that appears independent but is reportedly funded and directed by Google. According to Alaily, this new coalition seeks to shift regulatory scrutiny from Google to Microsoft by questioning Microsoft’s cloud practices before EU regulators.

Microsoft asserts that Google’s support of the coalition reflects an ongoing effort to downplay its own challenges in the regulatory landscape. The coalition’s goal, Microsoft suggests, is to divert attention away from Google’s regulatory pressures by targeting Microsoft’s cloud infrastructure. The accusations add fuel to a rivalry between the companies in Europe’s highly competitive cloud market, where Microsoft, Google, and Amazon Web Services (AWS) are primary players.

Google’s €470 Million Offer to CISPE Aimed at Prolonging Microsoft’s Litigation

Microsoft has accused Google of interfering with a settlement reached between Microsoft and CISPE, a European organization advocating for fair competition in the cloud market. CISPE’s 2022 complaint to the European Commission alleged that Microsoft’s licensing and pricing practices for Azure services hindered competitors by tying Windows Server to Azure, limiting customer migration options.

Following a July 2024 settlement worth $21.7 million, intended to improve CISPE members’ access to Microsoft software, Google reportedly offered CISPE €470 million to continue the regulatory complaint against Microsoft. While AWS supported Google’s proposal, most CISPE members chose to settle with Microsoft, indicating a preference for direct negotiations over prolonged regulatory action.

Microsoft’s 2023 Licensing Adjustments Under Fire from Google

Microsoft’s settlement with CISPE stems from changes the company implemented to respond to regulatory demands in 2023. Microsoft’s Cloud Solution Provider (CSP) program update aimed to allow more flexibility for European cloud vendors, including expanded rights to host Microsoft software on non-Azure servers and to lock in fixed pricing for longer terms.

However, in March 2023, Google Cloud President Amit Zavery criticized these adjustments as lacking in scope, suggesting that Microsoft’s changes only benefited a limited group of vendors. Zavery argued that Microsoft’s selective approach retained Azure’s competitive advantages, creating market limitations for rivals.

In his statements, Zavery emphasized that Microsoft’s licensing practices are particularly restrictive, noting how these policies impact competitors’ ability to offer similar cloud services. Google contends that Microsoft’s business strategy hinges on linking software access to Azure, making it more difficult for European customers to consider competing services without incurring added expenses.

Microsoft Alleges Google’s Use of Proxy Campaigns and Third-Party Commentators

Microsoft further accuses Google of creating a network of commentators and independent reports to reinforce its position. Alaily alleges that Google has financed industry experts and research publications criticizing Microsoft’s licensing practices. These critiques often omit Google’s involvement, presenting as impartial while subtly promoting Google’s own cloud stance.

Microsoft claims one such commentator published an op-ed that promoted Google’s regulatory goals while appearing unaffiliated. This indirect lobbying tactic, Microsoft argues, underscores Google’s efforts to influence public opinion and regulatory policies while distancing itself from the narratives being promoted. The accusations suggest Google has a coordinated approach in place for shaping regulatory discussions in Europe without directly involving itself.

Heightened European Scrutiny of Microsoft’s Cloud Licensing

Google’s September complaint to the European Commission formalizes its broader objections to Microsoft’s practices. Google’s complaint argues that Microsoft’s licensing conditions unfairly restrict cloud service providers, directly impacting market options and limiting competitive flexibility. By restricting non-Azure use of Windows Server, Google claims Microsoft forces customers into its ecosystem, which could limit innovation in the broader cloud market.

Microsoft defends its licensing practices as essential to protecting its intellectual property, likening them to media licensing models. Microsoft’s response suggests that fees tied to its software ensure equitable use and incentivize development. The broader context of Google’s EU complaint indicates that regulators may take a closer look at Microsoft’s policies, especially as pressure builds from multiple stakeholders in Europe’s cloud sector.

Last Updated on November 7, 2024 2:17 pm CET

SourceMicrosoft
Luke Jones
Luke Jones
Luke has been writing about Microsoft and the wider tech industry for over 10 years. With a degree in creative and professional writing, Luke looks for the interesting spin when covering AI, Windows, Xbox, and more.

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