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Top cloud players reject Microsoft's attempt to settle EU licensing complaint

Offer described by trade group as 'pretty paltry' – it wants more before negotiations begin

Exclusive Microsoft has tried, so far unsuccessfully, to settle a complaint about alleged unfair software licensing policies in the cloud filed last year by a collection of Euro cloud providers with the European Commission's antitrust team.

The Cloud Service Providers in Europe (CISPE) trade group representing 26 regional cloud providers – plus AWS – lodged the complaint in November with the EC's Directorate General for Competition.

This came a month after Microsoft introduced a series of concessions and tweaks to its licenses for its software when used in the cloud. CISPE responded at the time, saying if anything the changes added new "unfair practices to the list."

At heart, the issues include "unjustified and discriminatory bundling, tying, self-preferencing pricing and technical and economic lock-in" to "restrict choice." The practices are alleged to violate Article 102 TFEU and are grounds for formal investigation.

The EC recently started asking cloud providers and their customers questions about Microsoft Azure – specifically about discriminatory pricing, the bundling of more products with the dominant Office suite, and how Microsoft uses data on its cloud service providers' customers.

Microsoft has tried to settle the case before the EU launches an official investigation, according to a spokesperson at CISPE.

It was a pretty paltry offer

"It was a pretty paltry offer and very far short of anything we consent acceptance of," the trade group told The Register. "In principle, we are happy to settle it between us, but we have minimum requirements before we expect negotiations to go forward."

A separate joint complaint against Microsoft's claimed restrictive software licensing in the cloud was previously brought to the EU by OVHcloud, Aruba S.p.a, and the Danish Cloud Community in May 2022. It was settled in March this year but the contents of that agreement remain confidential.

The settlement was previously criticized by CISPE and others for lacking transparency. Francisco Mingorance, secretary general at the trade group, said the decision to stand down in such terms was "disappointing on many levels."

"What concerns our members is that it is still not clear what these deals are. They are bilateral and secret, and although we expected something to be offered to everyone across the market (otherwise surely it's creating new antitrust issues), it is not at all clear what the detail of those changes will be. We've seen only very high-level commitments so far. How will individual vendors know they are getting the same deal as those that complained?"

El Reg wonders if CISPE will stick those principles in its own situation. We'd hope so and suspect AWS – which has criticized Microsoft previously – will be pushing for substantial changes, in the expectation that Redmond has little appetite for a potential full-blown antitrust case.

Microsoft is also facing complaints about bundling Teams and OneDrive with other software suites, about which the EC has also started to ask questions.

A spokeperson at Microsoft sent us a statement: "We have demonstrated our willingness to address valid concerns regarding our cloud licensing terms. Worldwide, more than 100 cloud providers – 75 of which are based in Europe - have already taken advantage of our recent licensing changes and we will continue to partner with the European cloud community on specific ways to enable their growth." ®

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