Google Cloud, the cloud computing division of Alphabet, has recently voiced its concerns about Microsoft’s cloud computing practices, which it claims are anti-competitive and unfair. Google Cloud has also urged the European Union antitrust regulators to look closely at Microsoft’s dealings in Europe, especially its imminent deals with several smaller European cloud vendors.
What are Google Cloud’s allegations against Microsoft?
Google Cloud’s Vice President Amit Zavery told Reuters that Microsoft is using its dominance in the on-premise software market and its popular products, such as Office 365 and Windows, to tie customers to its cloud services, such as Azure. Zavery said that Microsoft imposes pricing and licensing restrictions that make it difficult for customers to choose other cloud providers, such as Google Cloud or Amazon Web Services.
Zavery also criticised Microsoft’s deals with some of its smaller European cloud rivals, which he said are selective and do not address the broader issues of Microsoft’s cloud practices. He said that Microsoft is “buying out those ones who complain and not make those terms available to everyone.”
According to Reuters, Microsoft has offered to change some of its cloud computing practices in a deal with a few smaller rivals, which will suspend their antitrust complaints. This move will likely prevent an EU investigation into Microsoft’s cloud conduct.
How does Microsoft respond to Google Cloud’s accusations?
Microsoft has not directly responded to Google Cloud’s accusations, but it has referred to a blog post from May last year, where its president Brad Smith said that Microsoft has a “healthy number two position” in the cloud market, with just over 20% of global cloud services revenues. Smith also said that Microsoft is committed to the European Cloud Community and their success.
A Microsoft spokesperson told Reuters on Thursday, “We are committed to the European Cloud Community and their success.”
Why does this matter?
The cloud computing market is a fast-growing and lucrative sector, with an estimated value of $371 billion in 2020, according to Gartner. The market is also dominated by a few players, with Amazon Web Services leading with 32% of the market share, Microsoft Azure with 20%, and Google Cloud with 9%, according to Canalys.
The cloud computing sector has also become increasingly important as more and more businesses and organisations shift their services and operations to the cloud, especially amid the COVID-19 pandemic. The cloud offers scalability, flexibility, cost-efficiency, and innovation benefits.
However, the cloud sector also faces regulatory scrutiny, as authorities are concerned about the potential abuse of market power, data privacy issues, cybersecurity risks, and vendor lock-in. The EU has been particularly active in enforcing antitrust rules and promoting fair competition in the digital market.
What are the implications for customers and competitors?
Google Cloud’s accusations against Microsoft could have implications for both customers and competitors in the cloud market. For customers, Google Cloud’s allegations could raise awareness of the potential drawbacks of relying on a single cloud provider or being locked into restrictive contracts. Customers could also benefit from more choice and better terms if regulators intervene or Microsoft voluntarily changes its practices.
For competitors, Google Cloud’s accusations could spark more complaints or investigations into Microsoft’s cloud conduct, which could level the playing field or create opportunities for smaller or newer players. Competitors could also use Google Cloud’s allegations to differentiate themselves or attract customers looking for alternatives to Microsoft.
Google Cloud has accused Microsoft of anti-competitive cloud computing practices and criticized its imminent deals with European cloud vendors. Google Cloud has urged EU antitrust regulators to look closely at Microsoft’s dealings in Europe. Microsoft has defended its position and said it is committed to the European Cloud Community. The cloud computing market is a fast-growing and lucrative sector, but it also faces regulatory scrutiny and competition challenges.