The ongoing legal challenge against Microsoft, which seeks £2 billion in damages for alleged overcharging of businesses using its software on competing cloud platforms, is gaining momentum as the first hearing approaches in December. The case, lodged with the UK’s Competition Appeal Tribunal (CAT), highlights significant disparities in costs associated with running Windows Server on rival clouds such as Google, AWS, and Alibaba, where prices can soar to four times higher than on Microsoft’s own cloud services.
Details of the Case
Dr. Maria Luisa Stasi, an expert in digital markets regulation, is leading this legal initiative, which was officially filed in December 2024. The urgency of the case was amplified by findings from the Competition and Markets Authority (CMA), which released a comprehensive 637-page report in July. This report concluded that Microsoft’s licensing policies placed its customers at a disadvantage when utilizing services from its primary competitors.
Among the key revelations of the CMA’s investigation were:
- Significant price and quality discrepancies when using Microsoft’s software on rival clouds compared to its own.
- Restrictions preventing certain Microsoft products from being available through AWS and Google licensing agreements.
- Limitations on customers transferring existing licenses to AWS and Google, hindering their competitive offerings.
Dr. Stasi emphasized the financial impact on organizations, stating, “If your organization has used Windows Server on Google, Amazon, or Alibaba’s cloud platforms at any point since December 2018, you have likely paid too much money. This legal action seeks to put that to an end.”
She further noted, “Billions have been drained from budgets as a result of Microsoft’s licensing practices. Cloud costs are soaring for UK businesses. Getting in touch does not commit you to anything but could result in your business or organization clawing back budget for IT costs.”
Upcoming Hearing and Microsoft’s Response
The CAT hearing scheduled for December will determine whether the case proceeds to trial. Microsoft was expected to submit its initial response by July, but the fact that Dr. Stasi is moving forward suggests the tech giant may not be inclined to reach a compromise at this stage.
Compounding Microsoft’s legal challenges, Google recently expressed frustration over the lack of progress regarding its formal complaint to the EU concerning Microsoft’s licensing practices on non-Azure platforms, asserting that the situation is deteriorating.
Additionally, another CAT hearing commenced last month focused on the sale of second-hand licenses, while another case is being prepared regarding alleged overcharging for specific Microsoft software products, including Microsoft Office and Windows, due to anti-competitive practices.
Microsoft’s troubles extend beyond business disputes; Austria’s Data Protection Authority recently ruled that the company had “illegally” tracked students through its 365 Education platform, raising further concerns about data privacy.
Moreover, Microsoft is also navigating challenges related to the end of support for Windows 10. In a bid to address consumer concerns, it has offered extended support options in the European Economic Area, albeit with minimal conditions.
In light of the CMA’s findings, the conclusion drawn was that Microsoft’s licensing practices negatively impact the competitiveness of AWS and Google in the cloud services market, particularly for customers purchasing cloud services that utilize Microsoft software.
The CMA has recommended that its board leverage digital market powers to address these issues, though no official actions have been announced as of yet. The Register has reached out to Microsoft for comment on these developments.
