Microsoft wants to avoid a costly EU antitrust battle as firm enters talks with cloud industry trade group

Microsoft has begun talks with Cloud Infrastructure Service Providers in Europe (CISPE) in an attempt to resolve an EU antitrust complaint regarding its cloud practices filed back in November 2022. 

In a statement by CISPE, the trade body announced that the discussions would focus on resolving ongoing concerns related to “unfair software licensing for cloud infrastructure providers and their customers.”

The Directorate General for Competition has been examining the complaint since it was first raised but, until now, there hasn’t been much progress.

It appears Microsoft is taking proactive steps towards rectifying the situation, though senior analyst at Forrester Dario Maisto argues that there are more pragmatic motivations at play owing to the two-pronged impact of antitrust fines.

“On the one hand they harm economically, on the other hand they can hit the reputation massively, and consequently have an impact on trust,” Maisto said.

“Microsoft trying to settle the antitrust complaint is a sign of the times, where hyperscalers are trying to reinforce trust from EU companies and prove that they are indeed trustworthy vendors,” he added.

Microsoft is facing antitrust criticism from all sides at the moment, with rival Google even issuing a letter to UK regulators over concerns about Microsoft Azure’s stranglehold on the country's market.

Microsoft’s responses to antitrust claims have so far been sporadic and reactive, such as its decision to unbundle Teams from its Microsoft 365 and Office 365 offerings.

While this recent announcement is more proactive, it’s also testament to a PR-focused reaction from Microsoft as it struggles with a lengthy backlog of criticism, according to Maisto.

“The trust component is fundamental in this story and it is really key for Microsoft to try to limit both economic and reputational damage from a possible investigation,” he said.

Microsoft needs to make concessions

Ahead of the talks, CISPE has made it clear that any steps Microsoft takes in terms of remedial action must apply across the entire sector, and must be accessible to all cloud customers in Europe.

Any agreements made between CISPE and Microsoft must also be made public and subject to scrutiny from third parties, the trade body said.

With CISPE demanding “substantive progress” to be made within the first quarter of 2024, the organization’s secretary general Francisco Mingorance has stressed the importance of a speedy resolution.

“Every passing day without resolution further undermines the viability of Europe’s cloud infrastructure sector and restricts the cloud options available to European customers,” he said.

“We are supportive of a fast and effective resolution to these harms but reiterate that it is Microsoft which must end its unfair software licensing practices to deliver this outcome,” he added.