Microsoft is facing accusations of overcharging tens of thousands of British businesses that rely on Windows Server. The core of the claim, valued at £2.1 billion, centers on allegations that the tech giant manipulated pricing rules to favor its own cloud platform, Azure, making it more expensive for businesses to operate Windows Server on competing cloud services like those offered by Amazon, Google, and Alibaba.
Legal Action and Core Allegations
The case has been brought before the Competition Appeal Tribunal, which is being asked to certify the claim to allow it to proceed. The action is being spearheaded by competition lawyer Maria Luisa Stasi, representing nearly 60,000 affected firms. Stasi's central argument is that Microsoft's pricing structures for Windows Server created an uneven playing field, effectively tilting the market in Azure's favor and forcing businesses to incur unnecessary costs.
Counsel for Stasi, Sarah Ford, informed the tribunal that Microsoft employed practices designed to "overcharge thousands of businesses" by making Windows Server more cost-effective when used on Azure. Ford further stated that Microsoft intentionally "degrades the user experience of Windows Server" on rival cloud platforms, characterizing this as a deliberate strategy to solidify its market position.
Industry Concerns and Regulatory Scrutiny
These allegations echo long-standing complaints within the cloud computing industry. Smaller cloud providers have consistently voiced concerns that Microsoft's licensing agreements effectively lock customers into Azure by imposing higher costs or reducing efficiency for those using key software on alternative platforms. Even the UK's Competition and Markets Authority (CMA) has previously acknowledged that certain terms imposed by Microsoft have "materially disadvantaged AWS and Google."
Microsoft, however, refutes these claims. The company maintains that its operational model, which involves both running Azure and licensing Windows Server to competitors, actually fosters competition rather than hindering it. Microsoft argues that Stasi's legal team has failed to provide a viable method for calculating the alleged losses, and therefore, the case should be dismissed.
This legal challenge is occurring amidst broader regulatory examination of the cloud market. As previously reported, European and UK regulators are investigating whether major cloud providers, including Microsoft, Amazon Web Services, and Google Cloud, have accumulated excessive influence. Concerns range from data portability issues to restrictive licensing practices.
In July, the CMA released a report that, while acknowledging Microsoft's dynamic market response, concluded that its cloud licensing rules were indeed detrimental to competition. The watchdog cautioned that these rules impede customers' ability to switch between providers or distribute their workloads across multiple cloud platforms.
Broader Regulatory Landscape
Regulators across Europe are increasingly focusing on the operational dynamics of cloud markets. The EU's Digital Markets Act (DMA) grants Brussels enhanced authority to address situations where a small number of large companies act as essential gateways for digital infrastructure. Officials are currently assessing whether the market dominance of AWS, Azure, and Google Cloud meets the threshold that would trigger new regulatory obligations.
Potential obligations under the DMA could include requirements for providers to facilitate customer data migration, reduce bundling practices, or improve interoperability with other platforms.
Potential Impact of the Lawsuit
If the Competition Appeal Tribunal permits the UK lawsuit to proceed, it could represent one of the most significant legal challenges Microsoft has encountered in the cloud computing era. For the businesses involved, the case represents an effort to reclaim funds they believe they were wrongly charged.