A UK law firm on Tuesday filed what amounts to a class-action lawsuit against Microsoft, accusing it of using its market share to overcharge clients running Windows Server on AWS, Google, or Alibaba cloud offerings instead of on Microsoft Azure. The lawsuit is seeking more than £1 billion (roughly US$1.3 billion).
“All UK businesses and organizations that bought licenses for Windows Server via Amazon’s AWS, Google Cloud Platform, and Alibaba Cloud may have been overcharged and will be represented in this new ‘opt-out’ collective action,” the law firm statement said.
The accusations make sense when viewed from a compliance/regulatory perspective. Although companies are allowed to give volume discounts and to offer other pricing differences for different customers, compliance issues kick in when the company controls an especially high percentage of the market.
That is why the statement announcing the litigation emphasized market share and referenced the UK’s Competition and Markets Authority (CMA). The litigation was filed with the UK’s Competition Appeal Tribunal.
“Microsoft is one of the biggest companies in the world. Its 2024 revenues set a new record totaling almost £185 billion. Microsoft is by far the dominant player in desktop operating systems with a market share of between 70% – 80%, according to the CMA,” the . By doing so, Microsoft is trying to force customers into using its cloud computing service, Azure, and restricting competition in the sector,” Stasi said. “This lawsuit aims to challenge Microsoft’s anti-competitive behavior, push them to reveal exactly how much businesses in the UK have been illegally penalized, and return the money to organizations that have been unfairly overcharged.”
Due to the nature of filings with the Competition Appeal Tribunal, a copy of the lawsuit was not publicly available on Tuesday, and it might not be made public for weeks. The law firm that filed it declined to provide a copy.
Reached for comment by Network World, Microsoft declined to comment.
These kinds of accusations are hardly new territory for Microsoft, which has into related areas with Microsoft.
Microsoft has .
Matt Kimball, VP/principal analyst for Moor Insights & Strategy, said that he is confused by some of the revelations in this litigation.
“I struggle to understand the justification for license fee disparity between deploying on Azure versus other clouds. Is the counter argument that there is an increased support and maintenance burden to Microsoft that it builds into its pricing?” Kimball asked. “That is about the only rationale I can find and perhaps it’s true. If so, I would ask if there is a separate license SKU with this pricing delta clearly explained?”
He noted that all of the largest cloud players engage in similar pricing schemes and tactics. “We are naïve as a market to assume that each CSP [cloud service provider] does not deploy techniques to lock customers in. Do super high egress fees constitute cloud lock in and anti-competitive behavior? That kind of feels a little bit like trying to keep me in one cloud versus another,” he said.
Kimball said that this litigation is focused on consumers and the smallest of the SMBs. The largest enterprises are almost certainly not being harmed by these tactics, he said.
“The likelihood of your largest enterprise customers being harmed is minimal,” Kimball said. “If there is a victim in this, it’s the small businesses. They are the ones who are being impacted.”
Jim Mercer, the program VP for software development at IDC, said the lawsuit’s accusations are nothing new for the fiercely competitive cloud space.
“The competition among the big hyperscalers — major cloud service providers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud — is intense due to the high stakes in dominating the cloud computing market,” Mercer said. “These companies are competing on multiple fronts, including pricing, innovation, scalability, infrastructure, performance, and service offerings, such as genAI capabilities. The hyperscalers are using whatever strengths or leverage they have to win market share.”
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