UK antitrust suit hits Microsoft with $1.25B claim in cloud costs

Microsoft is in the crosshairs of a UK competition-style lawsuit seeking £1 billion (about $1.25 billion at current exchange rates) in damages. It concerns allegations of fees charged by large software companies and other organizations for licensing Windows Server while they are customers of competing cloud computing platforms.

The case, filed on Tuesday in the UK’s Competition Appeal Tribunal, claims that customers of Amazon’s AWS, Google Cloud Platform (GCP) and Alibaba Cloud had to pay more to use Microsoft software compared to customers of its Azure cloud computing service. .

The case comes against a backdrop of increased competition complaints and scrutiny of cloud computing in recent years.

Last week, Reuters reported that the US Federal Trade Commission had opened a wide-ranging investigation into Microsoft, including its software licensing and cloud computing business.

Europe has also been drawing attention to the practices of cloud computing giants. Back in October 2023, the UK’s Competition and Markets Authority (CMA) launched an investigation into the cloud computing market after a referral from the communications regulator Ofcom, following its own investigation in April 2023 that had raised concerns about the market – expressing some concerns about Amazon and Microsoft’s practices.

The CMA’s investigation is ongoing, after the watchdog extended its official deadline to September, so it is not expected to report until next year. But apparently the plaintiffs are waiting to hear their verdict on Microsoft’s discounts before filing suit.

Appeal to the EU

The tech giant has paid “tens of millions in settlements” for similar European practices, they suggest – pointing to Microsoft’s settlement with the cloud trade association CISPE, back in July (reportedly worth 20 million euros), which closed the Complaint of -EU antitrust has been put back in November 2022.

The spirit of financial compensation can quickly change dollar signs in the eyes of litigants, so the CISPE settlement is likely to have an impact on advancing the UK claim. Although it’s also worth noting how high the figure for subject damages is compared to how much Microsoft reportedly paid to settle the EU complaint.

The UK litigation is funded by LCM Funding UK Limited, the UK office of the international finance provider, Litigation Capital Management (also known as LCM).

The UK’s billion-pound claim was filed by competition law and digital market regulatory expert, Dr. Maria Luisa Stasi, on behalf of “thousands” of local businesses and organizations that have been overcharged for using Windows Server. You bear all the costs (and therefore the risk) of the suit, thanks to the financial arrangement with LCM.

Commenting in a statement, Luisa Stasi said: “Quite simply, Microsoft is punishing UK businesses and organizations using Google, Amazon and Alibaba for cloud computing by forcing them to pay more for Windows Server. By doing so, Microsoft is trying to force customers to use the cloud computing service Azure and to limit competition in this field. “

“This case aims to challenge Microsoft’s anti-competitive behavior, pushing them to reveal how much UK businesses have been penalized illegally, and to refund the money to organizations that have been unfairly overcharged,” he added.

UK Microsoft customers are included on an opt-out basis (meaning they are automatically part of the action unless they opt out). As noted above, there are no costs for filing a lawsuit – only possible damages for winning if a lawsuit exists (or Microsoft agrees). Businesses looking to find out more information about the lawsuit can check out the lawsuit’s website.

Microsoft has been contacted for comment.