Microsoft is in the crosshairs of a British competition class action seeking damages of 1 billion pounds (about $1.25 billion at current exchange rates). It centers around accusations related to fees the software giant charged businesses and other organizations for Windows Server licenses when they were customers of a competing cloud computing platform.
The lawsuit, filed Tuesday at Britain’s Competition Appeal Tribunal, alleges that customers of Amazon’s AWS, Google Cloud Platform (GCP) and Alibaba Cloud have had to pay higher fees to use Microsoft software compared to customers of its own Azure cloud computing service. .
The lawsuit comes amid an increase in competition complaints and scrutiny of cloud computing in recent years.
Just last week, Reuters reported that the U.S. Federal Trade Commission had opened a broad antitrust investigation into Microsoft, including its software licensing and cloud computing businesses.
Europe is also taking notice of the cloud computing giant’s practices. In October 2023, the UK’s Competition and Markets Authority (CMA) launched a market study into cloud computing, commissioned by communications regulator Ofcom, following its own April 2023 study which expressed concerns about the market. Especially the practices of Amazon and Microsoft.
The CMA’s investigation is still ongoing after the statutory deadline was extended in September this year and is not expected to report until next year. But the litigants apparently didn’t wait for a ruling on Microsoft’s discounts before filing suit.
EU complaint
They say they have already paid “tens of millions of dollars in settlements” for the same practices in Europe. Microsoft points to a settlement (worth 20 million euros) signed with cloud services trade association CISPE in July, which it closed. The EU antitrust case was filed in November 2022.
The whiff of a financial settlement can quickly change the dollar sign in the eyes of litigation funders, so the CISPE settlement is likely to have contributed to pushing the UK’s claims forward. It’s also notable how high the headline damage figures are compared to how much Microsoft paid to resolve EU complaints.
The UK litigation is being funded by LCM Funding UK Limited, the UK office of international dispute finance provider Litigation Capital Management (aka LCM).
The £1 billion UK lawsuit was brought by competition law and digital markets regulation expert Dr Maria Luisa Stasi on behalf of “thousands” of local businesses and organizations who claim they were overcharged for using Windows Server in a class action lawsuit. Thanks to her financial arrangement with LCM, she bears all costs (and therefore risks) of the litigation.
Luisa Stasi said in a statement: “Put simply, Microsoft is punishing Google, Amazon and Alibaba by forcing UK businesses and organizations that use them for cloud computing to pay more for Windows Server. By doing this, Microsoft is trying to force customers to use its cloud computing service Azure and limit competition in the sector.”
“The purpose of this lawsuit is to challenge Microsoft’s anti-competitive behavior, reveal exactly how many businesses have been unlawfully penalized in the UK, and force money to be returned to organizations that have been unfairly overcharged,” she said. added.
Microsoft’s UK customers are included on an opt-out basis. This means that you will automatically participate in the action unless you actively choose to opt out. As mentioned above, there is no cost to being involved in the lawsuit, only the potential benefit of receiving damages if the lawsuit is successful or Microsoft settles. Organizations interested in learning more about the lawsuit can visit the claims website.
Microsoft has been contacted for comment on the lawsuit.
