Google Cloud Files Complaint Against Microsoft Over Anticompetitive Licensing

Google Cloud officially filed a complaint with the European Commission accusing Microsoft of anticompetitive licensing practices that restrict cloud computing choices for European businesses. The complaint highlights Microsoft’s alleged efforts to lock customers into its Azure cloud platform by imposing punitive licensing terms on those seeking to switch providers.

According to Google Cloud, Microsoft’s licensing policies unfairly limit customers from moving existing Microsoft workloads, such as those running on Windows Server, to competing cloud platforms like Google Cloud or AWS. Microsoft reportedly enforces steep financial penalties, with fees as high as 400% more for using non-Microsoft clouds, while creating additional technical obstacles to deter migration. These tactics, Google asserts, have inflated costs for European businesses by at least €1 billion annually, further stifling competition, innovation, and government efficiency in the region.

Microsoft's practices

Microsoft’s restrictive policies, particularly its changes to Windows Server licensing in 2019, have become a central issue. Windows Server, widely deployed in enterprise environments for applications and services, was traditionally offered with flexible licensing that allowed customers to run it on any hardware, whether in-house or through third-party clouds like HP, Dell, or Lenovo. This flexibility gave customers freedom to optimize costs and security by running their operations across different cloud platforms.

However, as the cloud computing market evolved, Microsoft introduced new licensing terms designed to bind users to its own Azure cloud. Customers who sought to move their Windows Server workloads to competitors like Google Cloud or AWS were hit with severe financial disincentives, in some cases seeing licensing costs increase fivefold. Beyond pricing, Microsoft introduced operational restrictions, such as limited access to security patches and interoperability barriers, which made running Windows Server on other platforms increasingly cumbersome.

Impact on European customers

Google Cloud points to research by Frédéric Jenny, a French economist and chairman of the OECD Competition Committee, to underscore the broader negative effects on European businesses. Jenny's research estimates that Microsoft's licensing restrictions have led to hidden costs beyond the immediate pricing penalties, including slowed digital transformation, reduced investments in innovation, and taxpayer waste.

The complaint further notes that Microsoft’s actions have particularly harmed European cloud providers. Following the 2019 licensing changes, Microsoft’s market share surged, while smaller, local providers struggled to compete. This has raised concerns about market concentration, particularly in Europe where maintaining competitive and diverse cloud options is seen as critical for digital sovereignty and innovation.

Security concerns also play a role in the complaint. Google highlights a major Microsoft outage in July as an example of how over-reliance on a single provider can lead to significant vulnerabilities. Research from Prescient found that such anticompetitive practices result in higher cybersecurity risks, which drive up insurance premiums and incident response costs for affected organizations.

Google Cloud's call for open licensing

In its complaint, Google Cloud emphasizes the need for fair and transparent licensing across the cloud industry. Unlike Microsoft, Google claims to promote open cloud ecosystems through its multi-cloud infrastructure services, which allow customers to run workloads on multiple cloud providers, reducing dependency on any single platform. Google also pioneered solutions aimed at enhancing digital sovereignty for European governments and offers more flexible terms, including waiving exit fees for customers who wish to change providers.

Google hopes that this formal complaint will spark further dialogue and lead to a regulatory intervention that ensures a more open and competitive cloud market in Europe. “Restrictive cloud licensing practices hurt companies and impede European competitiveness,” the company stated, reaffirming its commitment to promoting a level playing field for cloud services.

The European Commission's investigation will now focus on whether Microsoft’s licensing practices indeed violate European competition laws. If found guilty of anticompetitive behavior, Microsoft could face significant penalties and be forced to alter its cloud licensing strategies in the region. For European businesses, this case could be a turning point in restoring competitive balance and fostering innovation in the cloud market.