Microsoft’s tactics to win cloud battle lead to new antitrust scrutiny
Licensing terms changed fees for Microsoft products running in Amazon, Google cloud.
"Microsoft has escaped the recent backlash against the power and wealth of the biggest US tech companies.
Despite a stock market value that has soared to more than $2 trillion on its dominance of various parts of the business software market, it has avoided a repeat of the complaints that made it the most prominent target of antitrust action in the US and Europe at the end of the 1990s.
That is, until now.
Changes to some of the company’s core terms of business have caused growing unrest among some of its largest customers, as well as drawing complaints from rival cloud companies. Among the results has been a broad-ranging, though still informal, antitrust review in Brussels.
. . .Charging higher prices for using its software in rival clouds is only one way Microsoft has tried to steer more customers to its own cloud platform, according to critics. Other licensing terms, and the ending of technical support for certain services, added to pressure on customers to move to Azure, they said.
> Another tactic that has come under fire—and one also under review by the EU—involves bundling, or packaging a number of services together in a single product, even if many customers only require one element.
For instance, the highest level of security is only available for customers of the Microsoft 365 package of software if they pay for a premium version known as E5. According to Directions on Microsoft, this is another “bundle” that also requires them to buy many other features.
> Some of the accusations echo Microsoft’s last round of antitrust battles. They include a complaint that the company made it hard for users of the latest version of Windows to use a browser other than Microsoft’s own—a tactic it also stood accused of in the 1990s to destroy browser pioneer Netscape. Responding to the latest unhappiness, Microsoft two weeks ago made it easier for users to change the default browser in Windows.
Most Microsoft customers are on three- or five-year contracts, known as Enterprise Agreements, meaning that many have yet to face a license renewal since the 2019 changes. Also, Microsoft has made one-off concessions in licensing negotiations with some customers to delay the impact of the new pricing formula.
Even if Microsoft’s tactics are not illegal under the current law, they could fall foul of new laws that are designed to prevent powerful tech companies from favoring their own services, said Frédéric Jenny, a French antitrust expert who was commissioned by a group of cloud companies in Europe last year to report on potentially anti-competitive behavior by large software companies like Microsoft. . .
> Europe’s Digital Markets Act, adopted last month, aims to put new restrictions on companies deemed to be digital “gatekeepers.” Many details of the law have yet to be ironed out, and it was initially targeted at consumer Internet platforms, not business software companies like Microsoft.
However, focus is growing on the company. Customers are “very frustrated with what they perceive as Microsoft not letting them use the cloud of their choice,” said Michael Silver, an analyst at Gartner, who has advised the software company’s customers for more than 25 years. He added that, to many, the licensing furor “seems like a return to the old Microsoft.”
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