In the United Kingdom, Microsoft is facing a lawsuit filed on behalf of thousands of businesses and organizations, alleging that the company has unfairly overcharged them for Windows Server licenses used on competing cloud platforms. The lawsuit seeks compensation of over £1 billion, approximately $1.27 billion, for the alleged overcharging.
The lawsuit has an opt-out structure, meaning all UK businesses and organizations that have purchased Windows Server licenses through AWS, GCP, or Alibaba Cloud are automatically included in the case unless they choose to opt out. This arrangement is funded by LCM Funding UK Limited, allowing the plaintiffs to pursue the case without incurring costs, with the potential upside of winning damages if the suit prevails.
The case was filed by competition lawyer Maria Luisa Stasi with the UK’s Competition Appeal Tribunal (CAT), representing numerous British businesses and organizations that claim to have been adversely affected. The lawsuit contends that these entities have paid higher fees for using Windows Server on cloud platforms such as Amazon Web Services (AWS), Google Cloud Platform (GCP), and Alibaba Cloud, compared to those using Microsoft’s own Azure platform.
Stasi argues that Microsoft is leveraging its dominant market position in server operating systems to penalize businesses that choose alternative cloud providers. By doing so, Microsoft is allegedly forcing these businesses to pay more for Windows Server licenses, a practice that Stasi describes as “punishing UK businesses and organizations for using Google, Amazon, and Alibaba for cloud computing”.
The lawsuit aims to challenge Microsoft’s anti-competitive behavior, determine the exact extent of the extra costs incurred by UK businesses, and secure compensation for these unfair charges. According to Stasi, Microsoft’s pricing practices are a clear example of unfair competition, harmful to both the market and customers.
Microsoft’s dominant market position, with a market share of 70-80% in desktop operating systems as per the UK’s Competition and Markets Authority (CMA), is seen as a key factor in this alleged misconduct. By exploiting this strong market presence, Microsoft is able to impose higher prices on customers who opt for competing cloud platforms, a practice that the plaintiffs argue violates competition rules.
This lawsuit is part of a broader landscape of increasing regulatory scrutiny over Microsoft’s business practices. Earlier this year, Microsoft agreed to a €20 million settlement with the European cloud trade body CISPE, addressing similar allegations of unfair pricing policies. Additionally, Google has filed an antitrust complaint with the European Commission accusing Microsoft of locking businesses into its Azure ecosystem through restrictive licensing terms.
In the US, the Federal Trade Commission (FTC) has launched a comprehensive investigation into Microsoft’s business practices, including its cloud computing, software licensing, and AI offerings. The UK’s Competition and Markets Authority is also conducting an ongoing market investigation into cloud computing, which includes concerns over Microsoft’s practices.
