Google accuses Microsoft of abusing dominance in cloud

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25 September 2024 (Bloomberg) — Google has ramped up a legal squabble with Microsoft Corp. over the lucrative cloud market, accusing the US software giant of abusing its market dominance in a formal complaint to the European Union’s antitrust watchdog.

The Alphabet Inc. unit alleged that Microsoft’s licensing terms for Azure cloud services restricts customers accessing rival platforms, including Google Cloud and Amazon Web Services. It said Microsoft’s conduct amounts to an abuse of dominance under EU law, according to a summary of the complaint.

Google also argued that Microsoft’s dominance in the cloud sector risks exposing EU citizens to security risks and IT failures. It highlighted the turmoil that ensued in July when a faulty update by cybersecurity firm CrowdStrike Holdings Inc. crashed millions of Windows computers, crippling airports, banks, stock exchanges and businesses around the world.

Wednesday’s escalation follows an agreement forged between Microsoft and smaller European cloud firms that allowed it to dodge a formal EU probe. Google unsuccessfully tried to derail the settlement. Potential EU fines for antitrust violations can reach as high as 10% of a company’s annual sales.

Microsoft said it expects Google’s allegations will fall flat with EU watchdogs.

“Microsoft settled amicably similar concerns raised by European cloud providers, even after Google hoped they would keep litigating,” a spokesperson said. “Having failed to persuade European companies, we expect Google similarly will fail to persuade the European Commission.”

The Brussels-based commission acknowledged the complaint and said it would now assess it under the regulator’s standard procedures.

Google Cloud brought in profit of $1.17 billion in the second quarter, beating analysts’ estimates for operating income of $982 million. Google still trails Amazon.com Inc. and Microsoft in the cloud computing market, but in the past year, the unit has attracted business from artificial intelligence startups.

The public skirmishes over cloud dominance between Google and Microsoft is reminiscent of years’ old battles over abuses linked to the market dominance of Windows. In 2009, the Redmond, Washington-based Microsoft agreed to open up its operating system to rival browsers, in order to offset an escalating EU antitrust threat.