CMA: AWS and Google slam Microsoft for claiming its cloud licensing tactics are not harming them

‘Ample margin’ to compete

The company said in its summary hearing document that its licensing fees “do not materially raise costs for its competitors” and do not negatively impact on their business because AWS and Google have “ample margin” to compete with Azure.

Microsoft referred to AWS and Google as “listed providers” that provide an “important marketing channel” for the company, because of the ability for customers to run its software in their clouds.

The document went on to state that both firms’ financial results are proof that Microsoft’s actions are not harming their business.

“It is difficult for Amazon and Google to argue that they cannot afford to pay for its licenses, or that Microsoft is foreclosing them, when looking at their growth and profits,” the summary document stated. “Licensing fees are not material for Amazon and Google as they are a small cost relative to their total cloud revenues.”

As further proof that its licensing practices are not negatively impacting on either company in any way, Microsoft said neither firm has had their ability to “invest and remain competitive” affected by how it licenses its software for use within competing clouds.

“AWS has not slowed down its investments and its investments in [research and development] was the largest of the hyperscalers in previous years,” the document added.

Unsurprisingly, Amazon and Google have both disputed Microsoft’s take on the impact its licensing practices are having on their respective businesses, with AWS appearing to suggest that it is their joint customers who are suffering financially as a result – not the cloud providers themselves.

In its submission, AWS said Microsoft’s actions are the source of customer complaints, because its licensing practices are “artificially imposed” limits on where they can run software they own that could – in Amazon’s view – be easily remedied.

“Since 2019, there have been licensing restrictions imposed by Microsoft preventing customers from using previously purchased Microsoft licenses on AWS … [and] this has had huge financial consequences for customers,” the AWS submission stated. “Customers buying Microsoft products should have access to them forever and should be able to use it on the IT provider of their choice.

“AWS … receives complaints from customers regarding Microsoft’s licensing restrictions and their inability to run the software on their cloud of choice.”

Losing business

In its submission, Google said abiding by the terms of Microsoft’s Services Provider License Agreement (SPLA) had resulted in it losing business, separate to the fact its contents means it’s more expensive to run Microsoft workloads on its cloud compared with Azure.

“There are a number of non-price restrictions in the SPLA … that mean [Google] cannot compete with Azure,” the Google document stated. “[Google] is not able to provide certain security updates to customers, which has resulted in lost business.”

The company also shared details of the difficulties customers face, from a legacy software point of view, when trying to leave Microsoft, and how this situation could be contributing to instances of customers becoming locked into its systems.

“It is not simple for customers to rewrite legacy applications to move away from Microsoft, and part of the reason why there are so many legacy systems that have been running on Microsoft’s software for many years is because they are very complex and cost-prohibitive to rewrite,” said Google.

“When customers ‘lift and shift’ legacy Microsoft workloads to Azure, many smaller companies cannot afford to rewrite those workloads and it becomes difficult to migrate them away from Azure – so they are locked in.”

CMA is far from the first organisation to investigate Microsoft over its cloud licensing tactics, as the matter has also been the focus of studies and other anti-competitive investigations conducted by regulators and watchdogs in other parts of the world.