Microsoft Corp. is under increasing scrutiny from the European Union’s antitrust arm over its Azure cloud business. The probe comes amid rising concerns that the US tech giant is leveraging its market power to edge out rivals.
The Informal Probe
As part of an informal investigation, EU regulators are questioning competitors and customers about Microsoft’s possible abuse of business-sensitive information access from cloud firms it deals with commercially. This information, according to documents seen by Bloomberg, could be used by Microsoft to compete with other cloud-service providers in the market.
This scrutiny has been triggered by a series of complaints from cloud firms, including CISPE, an industry group linked to Amazon.com Inc.’s Amazon Web Services. The probe coincides with Microsoft’s ongoing efforts to obtain regulatory approval worldwide for its $69 billion acquisition of Activision Blizzard Inc., the publisher behind the blockbuster game Call of Duty.
A Possible Formal Antitrust Investigation on the Horizon
The European Commission’s inquiries require responses by May 16, with non-confidential versions of evidence to be submitted by the end of the month. This is often an indication that a formal antitrust investigation may soon be underway.
A formal investigation could potentially lead to significant fines. However, regulators also have the option to settle probes before they reach that stage or drop cases if their initial concerns are not substantiated.
Earlier complaints against Microsoft originated from various European cloud providers, including French firm OVH Cloud, Italian company Aruba, the Danish Cloud Association, and Nextcloud, a German cloud provider.
Microsoft’s Dominance in the Cloud Market: A Point of Contention
This development follows accusations by Google Cloud in March 2023, where it charged Microsoft with engaging in anti-competitive practices within the cloud computing market. Google Cloud’s Vice President, Amit Zavery, criticized Microsoft’s deals with several European cloud vendors and urged EU antitrust regulators to scrutinize them.
In response, Microsoft referred to a blog post from May last year, in which company president Brad Smith claimed a “healthy number two position” in the global cloud services market with just over 20% of the revenue share. A Microsoft spokesperson also reaffirmed the company’s commitment to the European Cloud Community and its success.
However, Zavery argued that Microsoft’s anti-competitive behavior extends beyond the cloud. He suggested that the company leverages its dominance in on-premise business, Office 365, and Windows to tie Azure and other cloud services together, making it difficult for customers to choose other providers.
The Path Forward
Microsoft faces a critical period ahead as EU antitrust investigators dig into its cloud practices. The outcome of this informal probe and potential formal investigation could have significant implications not only for Microsoft but also for the broader cloud computing industry, which has become increasingly competitive and essential to the modern business world.