Exclusive: Google says Microsoft’s cloud practices are anticompetitive

BRUSSELS, March 30 (Reuters) – Alphabet’s ( GOOGL.O ) Google Cloud has accused Microsoft ( MSFT.O ) of anti-competitive cloud computing practices and criticized imminent deals with several European cloud providers, saying they do not address broader concerns about the company’s cloud. license terms.

In Google Cloud’s first public comments about Microsoft and its European deals, vice president Amit Zavery told Reuters the company has raised the issue with antitrust agencies and urged EU antitrust regulators to take a closer look.

In response, Microsoft referred to a blog post last May in which its president Brad Smith said it ‘has a healthy number two position when it comes to cloud services, with just over 20 percent market share of global cloud services revenue’.

“We are committed to the European Cloud Community and their success,” a Microsoft spokesperson told Reuters on Thursday.

There is intense rivalry between the two U.S. tech giants in the fast-growing, multi-billion-dollar cloud computing business, with Google trailing market leader Amazon ( AMZN.O ) and Microsoft.

The sector has recently come under greater regulatory scrutiny, including in the US and in the UK, due to the dominance of a few players and its increasingly critical role as more and more companies move their services to the cloud.

Microsoft has offered to change its cloud computing practices in a deal with a few smaller rivals that would in turn suspend their antitrust complaints, a person with direct knowledge of the matter told Reuters this week.

The measure will avert an EU investigation.

“Microsoft definitely has a very anti-competitive stance in the cloud. They leverage a lot of their dominance in the on-premises business as well as Office 365 and Windows to tie Azure and the rest of the cloud services and make it difficult for customers to have a choice,” Zavery said in an interview late on Wednesday.

“When we talk to many of our customers, they find many of these linking practices, as well as the way they create pricing and licensing restrictions, make it difficult for them to choose other providers,” he added.

‘UNFAIR ADVANTAGE’

Zavery said that individual agreements made with several smaller European cloud providers only benefit Microsoft.

“They’re selectively buying out those who complain and not making those terms available to everyone. So that definitely gives Microsoft an unfair advantage and ties people who complained back to Microsoft anyway.”

“Whatever they offer, there should be terms for everybody, not just for one or two that they’ve picked and chosen, and that shows you that they have so much market power that they can kind of go and do these things individually.”

“My point to the regulators would be that they should look at this holistically, even if one or two suppliers can settle it doesn’t solve the wider problem. And that’s the problem we really need to solve, not individual suppliers’ problems.”

The European Commission declined to comment.

Microsoft is still facing another EU antitrust complaint from CISPE, whose members include Amazon. The trade group has rejected Microsoft’s changes.

Zavery dismissed the suggestion that the issue is just a Google-Microsoft quibble.

“The question is not about Google. I just want to make it very clear. It’s the cloud. The premise of the cloud was to have an open, flexible way to distribute your software and give customers more choice so they can run their software in whatever any place they choose to in a much easier way,” he said.

Reporting by Foo Yun Chee; Editing by Alexander Smith

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