Google accuses Microsoft of abusing cloud dominance

Google has stepped up a legal battle with Microsoft Corp. on the fringes of the lucrative cloud market, accusing the US software giant of abusing its market dominance in a formal complaint to the European Union’s antitrust watchdog.

Unit of Alphabet Inc. argued that Microsoft’s licensing terms for Azure cloud services restrict customer access to rival platforms, including Google Cloud and Amazon Web Services. According to a summary of the complaint, Microsoft’s behavior amounts to an abuse of a dominant position under EU law.

Google also argued that Microsoft’s dominance in the cloud sector risks exposing EU citizens to security risks and IT failures. It highlighted the turmoil that followed in July, when a flawed update from cybersecurity firm CrowdStrike Holdings Inc. crashed millions of Windows computers, crippling airports, banks, stock exchanges and businesses around the world.

Wednesday’s escalation follows a deal between Microsoft and smaller European cloud firms that allowed it to avoid a formal EU investigation. Google tried unsuccessfully to derail the deal. Potential EU fines for antitrust violations can reach up to 10% of a company’s annual sales.

Microsoft said it expected Google’s allegations to fall prey to EU watchdogs.

“Microsoft has amicably resolved similar concerns raised by European cloud providers, even after Google hoped they would continue to litigate,” a spokesman said. “Having failed to convince European companies, we expect Google to similarly fail to convince the European Commission.”

The Brussels-based commission acknowledged the complaint and said it would now assess it in accordance with the regulator’s standard procedures.

Google Cloud posted a profit of $1.17 billion in the second quarter, beating analysts’ estimates for operating income of $982 million. Google still trails Amazon.com Inc. and Microsoft in the cloud computing market, but in the past year the unit has attracted business from artificial intelligence startups.

The public spat over cloud dominance between Google and Microsoft is reminiscent of years-old battles over abuses of Windows’ market dominance. In 2009, Redmond, Washington-based Microsoft agreed to open up its operating system to rival browsers to offset a growing EU antitrust threat.

Copyright 2024 Bloomberg.