Microsoft: So What If It Costs 4X As Much To Run Windows Server In AWS, Alibaba, And Google?

For AWS and Google to urge the UK competition regulator to "intervene and constrain the price" that Microsoft charges them to license its software in their clouds is both "extraordinary and unprecedented."

Or so says Microsoft in a response to the Competition and Markets Authority (CMA), Britain's anti-trust police which issued a provisional ruling in January on the parlous state of the health of the UK cloud computing sector: competition could be better, it said, and Microsoft's tactic didn't help.

AWS and Google are classified by Microsoft as listed providers, as such clients wanting to run - for example - Windows Server, have to pay up to four times more to do so in those non-Azure clouds. Both vendors complained this puts them and their customers at a disadvantage.

The CMA agreed "Microsoft has the ability and incentive to partially foreclose AWS and Google using the relevant Microsoft software products and that its conduct is harming competition in cloud services."

Now Microsoft has thrown off the gloves and come out slugging in response [PDF]:

"In short, Amazon and Google are asking the CMA to intervene and constrain the price Microsoft can charge them when they use Microsoft's software to build and sell cloud services to their customers and the price Microsoft charges its clients on Azure for the use of Microsoft software.

"This is an extraordinary and unprecedented intervention, riding roughshod over Microsoft's intellectual property rights. No other software provider in the industry would be subject to similar limitations," says Microsoft.

The "only beneficiaries of this remedy" are Amazon and Google, adds the submission by Microsoft. No doubt some customers that don't want to run Microsoft wares in Azure - for whatever reason - may take exception.

Google previously described to The Register what it sees as a "software tax" that Microsoft has charged Google and AWS customers since 2019. Google filed its first ever anti-trust complaint against Microsoft with the European Commission in September.

Previous research in Europe by Frédéric Jenny, emeritus professor of Economics at ESSEC Paris Business, commissioned by AWS backed trade group CISPE, found customers in Europe were being collectively overcharged ten-digit sums due to Microsoft's Bring Your Own Licence policy.

Microsoft says that "owing" to its legacy software operation it has customers ready to move workloads from private datacenters to the cloud. It prefers them to choose Azure, even though "our software is also available on other public clouds, including AWS and Google Cloud.

"We compete to win their business in a variety of ways, including competitive pricing. One way we let them know that we intend to offer attractive prices in our marketing efforts is to provide a standing offer to discount Azure and offset the portion of the price attributable to Windows Server and SQL Server software when customers deploy workloads on Azure that rely in part on that software. This is not foreclosure; this is the essence of competition, and it benefits UK customers."

It asks the CMA to compare this strategy to AWS's S3, Aurora, DynamoDB, and Google's BigQuery, Looker, Google Analytics and more.

"Do AWS and Google license their proprietary software to their competitors, at any price at all? They do not." The submission adds: "You can see how we might feel unfairly singled out."

The protests from its major rivals ring hollow, says Microsoft, because AWS is the largest cloud computing vendor in the UK - where it accounted for up to 50 percent of the £9 billion ($11.4 billion) customers spent in 2023. Microsoft accounted for between 30 to 40 percent. Google Cloud is a distant third, yet it has grown to a $36 billion run-rate operation globally as of calendar Q4.

Microsoft also says Google has "sunk thousands, if not millions, of dollars to stand up and support 'trade associations,' who unsurprisingly parrot its claims to competition authorities and government officials."

It is correct that Google tried to join CISPE, offering a pretty penny in the process, yet Microsoft seemingly had more success in courting that trade assocation. Google has since joined the Open Cloud Coalition (OCC), and Microsoft has already branded this as a lobby group, astro-turfing officials.

• Cloud market working well ... if you're AWS and Microsoft
• Brit competition watchdog takes aim at Google, Apple's mobile ecosystems
• AWS claims customers are packing bags and heading back on-prem
• Google files first ever complaint with European Commission against Microsoft

Egress fees, high level of market concentration, and significant barriers to entry are other concerns expressed by the CMA on the overall cloud market in Britain. AWS has also come in for heavy criticism, though Google received a get-out-of-jail card as it was found in the UK to have a "much smaller market share." (Shhh, don't tell investors, keep this between Google and the CMA.)

The CMA is now deliberating whether to use its digital markets powers to make interventions relating to the barriers it has identified, namely egress fees, technical barriers, and Microsoft's licensing practices. A final decision is expected later this year.

The Register intends to pore over other submissions from cloud vendors to the CMA this week. ®