Google Cloud’s antitrust complaint against Microsoft explained

The European Union’s antitrust saga continues. Last Wednesday, Google Cloud filed an official complaint with the European Commission regarding Microsoft Azure's alleged anti-competitive licensing practices in cloud computing. 

According to Google Cloud, these practices force public and private entities to rely on a single vendor, making it difficult and costly to switch providers. In other words, these licensing practices encourage so-called vendor lock-ins, leading to higher costs, security risks, and, generally, a lack of free choice.

Moreover, Google Cloud announced that Microsoft charged customers 400% premium to have Windows Server run on competing cloud platforms other than Azure.

Cloud vendor lock-ins: the genesis

 Google Cloud’s blog post announcing the complaint details how exactly, in their opinion, Microsoft’s harmful licensing practice works. 

Everything started with Windows Server (formerly known as Windows NT Server), a group of server operating systems (OS) developed by Microsoft since 1993. At the time, it was an innovation that transformed the operations of both businesses and governments - everyone purchased Windows NT Server licenses and maximized their use of the platform.

The cloud services revolution took off between 2006 and 2010, when the "Holy Trio" – Microsoft’s Azure, Google Cloud, and Amazon Web Services—began offering cloud solutions to customers.

Initially, Windows Server customers were free to use other cloud providers or even combine multiple providers. However, as the pace of digitalization accelerated, particularly with public administrations transitioning from paper to digital (often inefficiently), Microsoft made a different decision in 2019: to tighten its licensing terms, favoring Azure over other cloud platforms. Google Cloud explains:

One of the most significant restrictions occurred in 2019, when Microsoft adopted new licensing terms that imposed extreme financial penalties on businesses wanting to use Windows Server software on Azure’s closest competitors, such as Google Cloud and AWS. Microsoft’s own statements indicate that customers who want to move their workloads to these competitors would need to pay up to five times more. And for those who choose to keep running Windows Server on competitors’ cloud platforms (despite the cost difference), Microsoft introduced additional obstacles over the last few years, such as limiting security patches and creating other interoperability barriers. 

Microsoft, following the complaint, on their end, responded: 

“Having failed to persuade European companies, we expect Google similarly will fail to persuade the European Commission”.

What about the EU Data act?

Currently, Microsoft’s Azure, Amazon Web Services and Google Cloud are among the major cloud services providers for EU’s public administrations. 

The EU Data Act (adopted in late 2023, to be gradually enforced until the end of 2027)  talks extensively about the broader issue of vendor lock-ins, empowering consumers to be able to freely switch between devices and vendors by requiring service providers to ensure the technical interoperability of their services and to end unfair contractual practices, such as imposing extra fees for switching services. 

However, in this particular case, both the EU Data Act and the Digital Markets Act (DMA) fall out of scope of either licensing practices or Azure as a vendor. 

The outlook for public administrations: ‘cloud first’, but not without preparation

All major cloud service providers can be counted among those who helped Ukraine survive during its most difficult period – at the beginning of the war in 2022, when Ukraine had to move fast from on-prem to cloud in order to save state-owned data and ensure the continuity of the government.  

Europe (at least the Eastern flank) learned its lessons from Ukraine, and nowadays, even some armed forces’ officials responsible for cybersecurity privately admit: “cloud-first.”  

However, moving to the cloud is not enough. Especially in the case of public administrations, wise cloud strategies, and public sector employees’ upskilling have to be in place, helping to maximize the benefits of cloud computing and minimize the risks. 

Relying too heavily on a single vendor is one of those risks—potentially resulting in long-term security and financial issues, especially given the pace of digitalization in public administrations.