Google has filed an antitrust complaint against Microsoft with the EU Commission, alleging the Redmond company is engaging in anti-competitive cloud licensing practices.

Amit Zavery, Google Cloud GM/VP and Head of Platform, and Gloud EMEA President Tara Brady penned a blog post outlining Google’s argument. The two executives make the case that the old ways of locking customers in to a single vendor—which may have worked in the pre-cloud software industry—are no longer viable or beneficial in an era defined by cloud computing. In spite of that, the execs point out multiple instances where Microsoft has continued the old ways.

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For years, in the productivity software space, Microsoft has locked customers into Teams, even when they preferred other providers. Now, the company is running the same playbook to push companies to Azure, its cloud platform. Microsoft’s licensing terms restrict European customers from moving their current Microsoft workloads to competitors’ clouds – despite there being no technical barriers to doing so – or impose what Microsoft admits is a striking 400% price markup.

To make matters worse, not only is Microsoft the only major cloud provider to still be trying to leverage vendor lock-in, but its attempts to do so are having significant negative effects, most notably in the realm of cybersecurity.

Microsoft is the only cloud provider to use these tactics, which have significantly harmed European companies and governments. Not only have they cost European businesses at least €1 billion a year, but also they have led to adverse downstream effects, including waste of tax funds, stifled competition, restrictions on distributors and channel partners, and heightened risk for organizations exposed to Microsoft’s “inadequate” security culture.

The execs specifically call out the roll Windows Server plays in Microsoft’s efforts to lock customer in to its Azure platform. Windows Server is a staple for much of the industry, and companies have long used their Windows Server licenses on the hardware of their choice. As cloud computing began to eclipse on-premise workflows, Microsoft saw a serious threat to its Windows Server business and reacted accordingly.

However, as cloud computing took off and promised to bring new benefits to European businesses, customers wanted to move their previously purchased licenses to other cloud providers, and in some cases to multiple clouds, to provide additional resiliency and security. Initially, Microsoft allowed them to do this. But as Azure faced more competition, Microsoft introduced new rules that severely limited customer choice.

One of the most significant restrictions occurred in 2019, when Microsoft adopted new licensing terms that imposed extreme financial penalties on businesses wanting to use Windows Server software on Azure’s closest competitors, such as Google Cloud and AWS. Microsoft’s own statements indicate that customers who want to move their workloads to these competitors would need to pay up to five times more. And for those who choose to keep running Windows Server on competitors’ cloud platforms (despite the cost difference), Microsoft introduced additional obstacles over the last few years, such as limiting security patches and creating other interoperability barriers.

The executives go on to highlight examples within the EU, including studies that show Microsoft’s practices lead to higher prices, reduced competition, and taxpayer waste, before highlighting how Google’s approach is different.

Google Cloud’s approach is different. We promote fair and transparent licensing for our customers. We pioneered a multi-cloud infrastructure service and a multi-cloud data warehouse, enabling workloads to run across multiple clouds. And we were the first company to provide digital sovereignty solutions for European governments and to waive exit fees for customers wishing to switch cloud providers.

Our point is a simple one: Restrictive cloud licensing practices hurt companies and impede European competitiveness. We look forward to continuing this discussion on how to keep the cloud market fair and open for European businesses and governments.

Google Is Trying to Revive a Settled Complaint

In some ways, Google is trying to revive a complaint that had already been made and settled—albeit by a different organization—without Google’s involvement.

In late 2022, the Cloud Infrastructure Service Providers in Europe (CISPE) filed a similar complaint against Microsoft, saying the company was “irreparably damaging” the EU cloud industry. In the complaint, CISPE made many of the same arguments as Google, saying Microsoft was unfairly locking customers in to its own platforms and abusing its dominance in some markets to prop up its cloud business.

“Leveraging its dominance in productivity software, Microsoft restricts choice and inflates costs as European customers look to move to the cloud, thus distorting Europe’s digital economy,” Francisco Mingorance, Secretary General of CISPE, said at the time. “DG Comp must act swiftly to open a formal investigation with a statement of objections against Microsoft’s software licence abuses to defend the robust cloud ecosystem Europe needs and deserves.”

In July 2024, Microsoft and CISPE struck a deal that settled the claim, giving EU cloud providers the ability to offer Microsoft and Azure services that previously were only available to direct Microsoft customers.

“This is a significant victory for European cloud providers,” said Secretary General Mingorance. “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. 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.

“To ensure the continued primacy of European members, the CISPE General Assembly has also instructed the Board to revise the governance of the association to ensure that European businesses and SMEs remain in the driving seat for CISPE campaigns should Microsoft or other global hyperscalers ask to become members. Proposed modifications will be presented ahead of the next General Assembly on 18th October 2024.”

Interestingly, the terms stipulate that neither Google Cloud nor AWS can benefit from the agreement, and AWS was excluded from the negotiations altogether. Needless to say, Google was not happy with the deal, and Zavery expressed his company’s dismay shortly after.

MSFT playbook of paying off complainants rather than address their complaints shouldn’t fool anyone,” Zavery wrote on X. “The deal doesn’t apply to all CISPE members. CISPE admits to a payoff. EU cloud competitors become Azure customers. CISPE members under gag order, can’t file complaints anymore.”

Google clearly believes that Microsoft’s deal with CISPE does little to address the company’s underlying behavior or the harm such behavior allegedly causes the cloud industry. The fact that Google doesn’t benefit from the CISPE deal no doubt adds to the company’s motivation in filing its own complaint.

Microsoft has worked hard in recent years to separate itself from the rest of the tech industry, portraying itself as a company that is more open to working with regulators and promoting fair practices in the industry. Despite those efforts, Google clearly believes Microsoft has not changed enough and is trying to force its hand with the EU complaint.