EXCLUSIVE-Google requests competition action against Microsoft in the British cloud computing market – 01/12/2023 at 02:11

(Adds paragraphs 9 and 10 of Microsoft comments) by Martin Coulter

Google

GOOGL.O

asked the British competition regulator to take action against Microsoft

MSFT.O

saying its business practices put rivals at a significant disadvantage, according to a letter seen by Reuters.

Microsoft and Amazon

AMZN.O

are under increasing scrutiny around the world due to their dominant position in the cloud computing sector, with regulators in the United Kingdom, the European Union and the United States scrutinizing their market power.

The Competition and Markets Authority (CMA) launched an investigation into the UK cloud computing sector in October, following a referral to Ofcom, the media regulator, which found Amazon and Microsoft’s dominant position in the market.

As of 2021, Amazon Web Services (AWS) and Microsoft’s Azure hold a combined 70-80% share of the UK market for public cloud infrastructure services, according to Ofcom. Google’s cloud division was the closest competitor, with a share of around 5 to 10%.

In a letter submitted to the CMA, Google claimed that Microsoft’s licensing practices unfairly discouraged customers from using competing services, even as a secondary provider alongside Azure.

“With Microsoft’s licensing restrictions in particular, UK customers have no economically reasonable choice but to use Azure as their cloud service provider, even if they prefer the price, quality, security, innovations and features of competitors” , Google said in its letter to the CMA. .

Such practices directly harm customers and are the only significant barrier to competition in the UK cloud computing market, the company said.

Last year, Microsoft updated its licensing rules to address these concerns and promote competition, although the changes did not satisfy rivals.

A Microsoft spokesperson said the company worked with independent cloud providers to address concerns and provide opportunities, and that more than 100 providers around the world have taken advantage of the changes.

“As the latest independent data shows, competition among cloud hyperscalers remains healthy. In Q2 2023, Microsoft and Google made similarly modest gains in AWS, which continues to be the global market leader by a significant margin,” said the Microsoft spokesperson.

Speaking to Reuters, Google Cloud vice president Amit Zavery criticized Microsoft’s practices and said his company is committed to a multi-cloud approach in which customers can easily move between providers according to your needs.

“Many of our software and cloud services interoperate and can run on AWS or Azure, so you’re not limited,” he said. “If you don’t fix this, you will end up with fewer cloud service providers, innovation won’t really happen, and investment will start to decline

At issue is Microsoft’s decision to update the terms under which customers intend to use their Windows or other software licenses in cloud computing, resulting in higher costs if they use Google or AWS instead of Azure, the Microsoft solution. Microsoft.

Asked why Amazon, which has a larger share of the cloud computing market than Microsoft, doesn’t pose a similar anticompetitive risk, Zavery said AWS consumers don’t face the same restrictions.

“There are some problems, in terms of interoperability in the cloud, but we can solve them. This is a discussion between suppliers, which is well understood, and customers are forcing this conversation,” he said.

“The problem we have with Microsoft is that there is no technical problem, but there are licensing restrictions, which means we are now prevented from being competitive

Google made six recommendations to the CMA, including requiring Microsoft to improve interoperability for customers using Azure and other cloud services and prohibiting it from withholding security updates for those switching systems.

The CMA did not immediately respond to a request for comment.

Leave a Comment