UK Businesses Sue Microsoft $1.27B For Overcharging Rival Cloud Customers

UK firms claim Microsoft's cloud software licensing practices are anti-competitive, seeking over £1B ($1.27B) in damages.

By Thea Felicity

Dec 04 2024, 09:45 AM EST

Department Of Homeland Security Led Review Finds Microsoft At Fault — NEW YORK, NEW YORK - APRIL 03: The Microsoft logo is seen at an Experience Center on Fifth Avenue on April 03, 2024 in New York City. A Cyber Safety Review Board, created in 2021 by executive order and led by Homeland Security, released a report that detailed lapses by Microsoft that led to a targeted Chinese hack last year of top U.S. government officials’ email that included the email of Commerce Secretary Gina Raimondo. Michael M. Santiago/Getty Images

Microsoft will end the year with a fresh lawsuit from UK firms who accused them of overcharging customers who use its Windows Server software on rival cloud platforms, such as Amazon Web Services (AWS), Google Cloud, and Alibaba Cloud.

Filed on December 3, 2024, the case claims that UK businesses pay more for licensing Microsoft's software when it's run on competitors' cloud services compared to when it's hosted on Microsoft's own Azure platform.

CNBC reported that the plaintiffs claim this pricing difference is unfair and anti-competitive and that affected businesses are owed over £1 billion ($1.27 billion) in damages.

The lawsuit, led by competition lawyer Maria Luisa Stasi, points out that Microsoft is using its dominant position in the cloud market to persuade customers to switch to its Azure platform. By charging higher prices for its software on other cloud services, Microsoft is allegedly restricting competition in the cloud computing sector. The suit includes thousands of UK businesses that could be eligible for compensation if Microsoft is found liable. This is an activity of class action, meaning that involved corporations do not have the authority to file individual suits in court but will be incorporated automatically in the case.

Analysts believe that Microsoft was "punishing" UK businesses for using competitors' cloud services and forcing them to pay more for essential software will eventually lead them back to their services.

Lawsuits Against Microsoft Over its Cloud Platform

Earlier this year, Microsoft settled a similar case in the EU by agreeing to lower prices for firms using its software on smaller cloud platforms, based on the European Commission's report. The settlement followed an antitrust complaint accusing Microsoft of unfairly locking customers into its Azure platform. Still, it is facing legal challenges in other directions, including an antitrust complaint filed by Google regarding the same licensing issues.

Since the cloud market is a huge competition for the leading technology companies, European and UK regulators are now on stand by to focus their attention on software licensing practices.

Looking ahead, the Competition and Markets Authority, responsible for investigating anti-competitive practices in the cloud industry, is expected to release its own findings soon to move the lawsuit forward.