Microsoft once again under fire over cloud software licensing

Microsoft’s licensing of its software and services in the cloud is getting it into more hot water in Europe. This time it’s a group of Spanish startups that has called on regulators to investigate Microsoft behavior in the cloud marketplace.

The complaint, from La Asociación Española de Startups (AES) to the Spanish National Markets and Competition Commission (CNMC), accuses Microsoft of “anti-competitive practices” in the cloud marketplace.

The restrictive practices in the cloud marketplace are affecting both suppliers and cloud customers within the startup ecosystem in Spain, the association said.

AES, representing more than 700 startups in Spain, alleges that Microsoft is taking advantage of its dominant position in the market for operating systems (Windows) and office productivity software (Microsoft Office) to force the use of its cloud services, Microsoft Azure.

At issue are questions around data portability (moving information from one cloud platform to another) and restrictive contractual limitations on software licensing.

Technical and contractual barriers are limiting startup competition and innovation, according to AES. The association is calling on regulators to investigate their complaint and acting to ensure a more open, fair and competitive marketplace for cloud services in Spain.

Microsoft denied any wrongdoing or market manipulation.

“Microsoft provides choice and flexibility for our customers to switch to another cloud provider at no cost, and our licensing terms enable our customers and other cloud providers to run and offer Microsoft software on every cloud,” a Microsoft spokesperson told Computerworld. ”We will engage with the Spanish Start Up Association to learn more about its concerns.”

Cumulus

The Spanish complaint adds to a growing volume of similar complaints against Microsoft across Europe.

Last year CISPE (Cloud Infrastructure Service Providers in Europe), which represents European cloud infrastructure providers, filed a complaint against Microsoft with the European Commission.

CISPE’s complaint alleged that anti-competitive practices such as discriminatory packaging, linking, and pricing are among the technical and economic barriers that made it difficult for customers to freely choose between cloud service providers.

Francisco Mingorance, secretary general of CISPE, told Computerworld that “not only the target, but also the practices [targeted in the Spanish complaint], present some overlap with our pending EU-level complaint.”

CISPE is holding talks with Microsoft aimed at “resolving ongoing issues related to unfair software licensing for cloud infrastructure providers and their customers in Europe”. Any remediations or resolution agreed ought to be public and apply across the sector, CISPE insists.

Egress fees

In the UK, telecoms regulator Ofcom has referred the public cloud infrastructure market to to UK’s Competition and Markets Authority for further investigation.

High fees for transferring data out, committed spend discounts and technical restrictions are “making it difficult for business customers to switch cloud provider or use multiple providers”, according to Ofcom. The regulator’s is concerned that the business practices of market leaders Amazon Web Services and Microsoft could limit competition.

At issue are factor such as egress fees, the charges that customers pay to transfer their data out of a cloud. Hyperscalers – such as AWS, Google Cloud and Microsoft – set them at significantly higher rates than other providers.

“The cost of egress fees can discourage customers from using services from more than one cloud provider or to switch to an alternative provider,” according to Ofcom.

Technical barriers to interoperability and portability, factors that mean that customers need to reconfigure their data and application to work on different clouds, and committed spend discounts are also an issue in alleged vendor lock-in and restrictive practices in the cloud.