A significant legal battle is set to unfold as the Competition Appeal Tribunal (CAT) has approved a £2 billion class action against Microsoft, aimed at securing compensation for approximately 59,000 businesses and organizations utilizing the Microsoft Windows Server operating system in non-Microsoft public clouds.
Legal Proceedings Against Microsoft
The collective action, spearheaded by digital markets regulation expert Maria Luisa Stasi, alleges that Microsoft has been overcharging UK entities for the use of its Windows Server on competing cloud services. The tribunal dismissed Microsoft’s objections to the certification of the case, granting a Collective Proceedings Order on an opt-out basis, which allows the matter to proceed to trial.
In a conversation with Computer Weekly late last year, Stasi highlighted Microsoft’s substantial influence in the IT infrastructure sector. She stated, “Microsoft is dominant on some parts of the [IT infrastructure] stack and is using this power to impose things that otherwise will be difficult to accept for business users, and the reality is that they can do that because they limit choice for people.” Stasi emphasized the financial repercussions of Microsoft’s practices on both public and private organizations, expressing her eagerness to prepare for trial and recover funds on their behalf.
Earlier this year, the UK Competition and Markets Authority announced the initiation of a Strategic Market Status investigation into Microsoft, focusing on its software licensing practices within the cloud market. Stasi’s class action addresses two main aspects of Microsoft’s licensing strategy:
- Pricing Abuse: This pertains to the Microsoft Service Provider License Agreement (SPLA), where Microsoft allegedly charges higher wholesale prices for Windows Server under SPLAs compared to the equivalent licenses for Azure users.
- Re-Licensing Abuse: This involves Microsoft permitting organizations with on-premise Windows Server licenses to deploy the server operating system on Azure without incurring re-licensing fees. However, this option is not available for customers opting to deploy Windows Server on other approved cloud service providers, a practice facilitated by the Azure Hybrid Benefit.
James Hain-Cole, a partner at law firm Scott+Scott, which is leading the case, expressed satisfaction with the tribunal’s decision. “We are very pleased with the tribunal’s decision, including its confirmation that Dr. Stasi’s action should proceed on an opt-out basis, as sought in her application,” he remarked. Hain-Cole further noted, “Certification of this claim is a pivotal step in securing compensation for thousands of businesses and organizations. The decision illustrates the importance of the regime for UK businesses who, like consumers, require and deserve the access to justice that it was designed to offer.”
As the trial approaches, the focus remains on the implications of Microsoft’s alleged anti-competitive practices, which continue to attract scrutiny from competition regulators across the globe. The tribunal’s ruling indicates that the claim has a strong likelihood of success, setting the stage for a potentially landmark case in the realm of digital market regulation.
