A British lawsuit alleges that Microsoft overcharges customers of competing cloud corporations

LONDON – Microsoft was accused on Tuesday of unfairly overcharging customers of rival cloud corporations and sought greater than 1 billion kilos ($1.27 billion) in damages.

The lawsuit accuses customers of using it Amazon Web Services (AWS), Google Cloud platform or Alibaba Cloud – all major competitors to Microsoft's Azure cloud – are being forced to pay more to license the tech giant's cloud-based Windows Server software on rivals' infrastructure.

Microsoft offers corporations running Windows Server on Azure a cheaper price than direct competitors resembling AWS, Google's Cloud or Alibaba Cloud. The lawsuit argues that corporations that run the widely used server software are essentially being overcharged in the event that they use alternative cloud computing solutions.

It adds that Microsoft is exploiting its market dominance in cloud-based server operating systems by imposing higher prices and inspiring customers to modify to Azure. Plaintiff Maria Luisa Stasi, a contest lawyer, is demanding greater than £1bn in compensation for affected corporations.

Microsoft declined to comment on the lawsuit.

“Simply put, Microsoft is penalizing British companies and organizations for using Google, Amazon and Alibaba for cloud computing by forcing them to pay more money for Windows Server,” said Stasi, head of legal and policy on the advocacy group for digital rights Article19 in an announcement shared with CNBC.

“In doing so, Microsoft is trying to force customers to use its cloud computing service Azure and limit competition in the industry.”

She added that the lawsuit goals to “challenge Microsoft's anti-competitive behavior, force Microsoft to disclose exactly how many companies in the UK have been unlawfully penalized, and return money to organizations that were wrongfully overpaid.”

Thousands of British corporations and organizations are represented within the lawsuit, which is an “opt-out” class motion. This implies that any potentially affected company will routinely be counted and might receive a payout if Microsoft loses.

Stasi represents clients at Amazon, Google and Alibaba, but doesn’t represent any of those corporations, its spokesperson told CNBC.

The development comes because the UK Competition and Markets Authority prepares “behavioral” remedies against anti-competitive practices within the cloud industry following a months-long investigation. Two sources told CNBC last month that a preliminary decision could come as early as this week.

The CMA declined to comment on the particular timing of its interim decision. However, a deadline of November to December 2024 was previously set.

Earlier this 12 months, Microsoft reached a 20 million euro ($21 million) settlement with cloud trade group CISPE and its members, ending an EU antitrust lawsuit that accused the tech giant of unfair software licensing practices in its cloud division.

As a part of the deal, Microsoft agreed to charge corporations the identical price to run its software on smaller cloud corporations' systems because it does by itself Azure platform.

But in September, Google filed a brand new antitrust lawsuit against Google with the European Commission, the EU's executive body.

The lawsuit alleged that Microsoft's software licensing terms effectively lock corporations into the Azure platform and make it difficult to modify – thereby exerting control over the cloud market.

Solange Viegas Dos Reis, chief legal officer of French cloud computing company OVHCloud, told CNBC that some cloud hyperscalers are essentially “selling two products together that should be completely separate” – widely used software and cloud infrastructure.

There can also be the issue that hyperscalers offer more functionality of their software when it runs on their very own cloud services than on third-party cloud services, said Dos Reis, without singling out any specific provider.

According to data from Synergy Research Group, the market share of European cloud corporations halved from 27% to 13% from 2017 to 2022, lagging behind international competition as the overall European cloud market grew to €10.4 billion (€11 billion). US dollars) increased fivefold.

The issue of software licensing within the cloud has not yet been assessed, Dos Reis said in an interview with CNBC last week, adding that OVH has “great hope” within the CMA's cloud competition case.

OVHCloud agreed to its own settlement with Microsoft in July, which led to the corporate dropping its own EU antitrust lawsuit against the US tech giant.