Last month, AWS, in a letter to the UK’s competition watchdog, alleged that Microsoft was involved in cloud licensing practices that restrict customer choices and make switching between cloud providers difficult.
Amazon Web Services (AWS) has blamed Microsoft for anti-competitive practices in the cloud computing segment in a letter to the UK’s Competition and Markets Authority (CMA).
“Some IT providers, such as Microsoft, use licensing practices that restrict customer choice and make switching more difficult the cloud services provider wrote in the letter to the watchdog, which has now been made public. “For example, Microsoft changed its licensing terms in 2019 and again in 2022 to make it more difficult for customers to run some of its popular software offerings on Google Cloud, AWS, and Alibaba.”
“To use many of Microsoft’s software products with these other cloud services providers, a customer must purchase a separate license even if they already own the software. This often makes it financially unviable for a customer to choose a provider other than Microsoft,” AWS added in the letter.
After the publication of an interim report, UK communications regulator Ofcom in July referred the cloud infrastructure market for investigation around anti-competitive practices in cloud computing to the CMA.
The interim report said that existing cloud customers in the UK are paying more than they should be for their cloud infrastructure or having to settle for low-quality services and that the regulator had heard concerns from some customers about their inability to switch or use multiple providers.
The development came three months after Ofcom raised “significant concerns” about AWS and Microsoft, alleging that they were harming competition in cloud infrastructure services and abusing their market positions with practices that make interoperability difficult.
In October, the CMA launched an antitrust probe into Microsoft and Amazon’s cloud services.
During that time, an AWS spokesperson had said that the company disagrees with Ofcom’s findings and believes they are based on a fundamental misconception of how the IT sector functions, and the services and discounts on offer.
AWS had also denied charging customers separate fees for switching data to another IT provider, stating that its customers make “hundreds of millions of data transfers each day in the ordinary course of business, and over 90% of our customers pay nothing for data transfer because we provide them with 100 gigabytes per month for free.”
Email queries sent to both AWS and Microsoft went unanswered.
In November, Google Cloud too had shared a letter with the CMA blaming Microsoft for anti-competitive practices around cloud offerings.
“The CMA has specifically named Microsoft in its Issues Statement; with Microsoft’s licensing restrictions in particular, UK customers are left with no economically reasonable alternative but to use Azure as their cloud services provider, even if they prefer the prices, quality, security, innovations, and features of rivals,” Google wrote in the letter.
“These licensing practices are the only insurmountable barrier preventing competition on the merits for new customers migrating to the cloud and for existing workloads. They lead to less choice, less innovation, and increased costs for UK customers of all sizes,” the company added.
During April’s initial investigation, Ofcom had said that AWS and Microsoft Azure had a combined UK market share of between 60% and 70%, while the next nearest competitor, Alphabet-owned Google, has a 5% to 10% share.
The CMA, which is expected to close the investigation by April 2025, puts the UK’s cloud computing market at $9.44 billion (£7.5 billion).
