Google and Microsoft are at loggerheads: here is the origin of this new conflict

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Google and Microsoft are competitors in the field cloud. And lately, relations between the two groups have been far from smooth. In September, Google Cloud announced that it was filing a complaint against Microsoft with the European CommissionIndeed, the Mountain View firm accuses Microsoft of resorting to anti-competitive practices in terms of licensing. Specifically, Google is accusing Microsoft of imposing restrictions on customers who want to use the Windows Server license on Azure’s closest competitors, Microsoft’s cloud service.

“One of the most significant restrictions occurred in 2019, when Microsoft adopted new licensing terms that imposed extreme financial penalties on companies wishing to use Windows Server software on Azure’s closest competitors, such as Google Cloud and AWS,”, Google said in a statement. And this week, Microsoft is accusing Google of running a campaign to discredit its cloud business.

Microsoft's accusations against Google

Rima Alaily, Microsoft's deputy general counsel, discusses in particularGoogle’s creation of a group of cloud players whose goal would be to attack the Redmond firm and discredit it. “Google has gone to great lengths to conceal its involvement, funding, and control, including recruiting a handful of European cloud providers to serve as the public face of the new organization. When the group is launched, Google, we understand, will likely present itself as a secondary member rather than its leader,”, writes the Microsoft employee.

These accusations have nevertheless been denied by Nicky Stewart, who will lead this new coalition. “We are not against any one company, we are a pro-market coalition focused on defending the principles that will strengthen the cloud services market in Europe, primarily openness and interoperability,”, Stewart said, according to TechCrunch. “Any company that shares these values ​​and cares about a healthy and thriving cloud market should join us.”

Google also responded, through a representative quoted by The Verge:  “We have been very public about our concerns about Microsoft’s cloud licensing. We and many others believe that Microsoft’s anticompetitive practices lock in customers and create negative downstream effects that impact cybersecurity, innovation, and choice. You can read more in our many blog posts on these issues.”

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At the time of writing, the website of the new coalition, called the Open Cloud Coalition, is already online and includes the list of members, including Google.

A problem solved for other companies

It should be noted that Microsoft has already been the subject of another complaint filed by a group of European actors, because of this licensing problem. However, these companies have withdrawn their complaint, following an agreement with the Redmond firm. “This collaboration will allow European Cloud providers to offer Microsoft applications and services on their local cloud infrastructures, thus meeting the demand for sovereign cloud solutions […]”, we read in the press release that has announced this agreement.

But the problem is that the agreement only concerns a group of European companies, but not the giants, such as Google, Amazon or AliCloud. However, this difference in treatment would be justified, for Microsoft. “It made sense at the time – and it still does – that we would not make the same changes for hyperscale providers like Google and Amazon, whose market situation is very different”, Rima Alaily explained in her blog post.

Two different points of view

Microsoft’s point of view on the subject of licenses is as follows: “When a streaming service, like Netflix or Disney, includes a movie in its service, it pays for that right. They don’t get credit or a discount if a subscriber owns a DVD of the same movie. Software and the cloud are no different.”

But Google sees it differently. In announcing its lawsuit in September, Google explained: “When businesses and governments initially paid for Windows Server licenses, they had the right to run them on any hardware they wanted– and they did so for many years on machines from HP, Dell, Lenovo and others. However, as cloud computing took off and promised to bring new benefits to European businesses, customers wanted to move their previously purchased licenses to other cloud providers, and in some cases multiple clouds, to provide additional resilience and security. Initially, Microsoft allowed them to do this. But as Azure faced increased competition, Microsoft introduced new rules that severely limited customer choice.”

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