Europe ‘sleepwalking’ into deeper dependency on Microsoft cloud technologies, claims OCC

Europe is sleepwalking into an even deeper dependency on Microsoft’s cloud technologies. That is the conclusion being drawn following the publication of a report into public sector usage of productivity software across the European Union (EU).

The 36-page Quantifying EU public sector dependence on productivity software report set out to examine the use of productivity software across the EU and selected member states.

It was compiled by economic consultancy firm Compass Lexecon and commissioned by pro-cloud market competition advocacy group the Open Cloud Coalition (OCC).

The point of the exercise was to determine the extent to which public sector organisations in the EU are dependent on the productivity software offerings of specific suppliers.

To achieve this, the report’s authors combined market share data from Statista and procurement details from the Ted Electronic Daily (TED) resource with partner ecosystem information from other publicly available sources.

It concluded that Microsoft is the productivity software market leader, with an estimated overall market share of 77% at EU level, rising to potentially 80% at country level.

“Microsoft’s lead becomes even more pronounced in the narrower segments where it is active,” the report continued. “In the collaboration segment, Microsoft’s shares could be up to 84% at the EU level and 80-86% at country level. In the office segment, Microsoft’s shares could be up to 90% at the EU level and 86% to 92% at country level.”

From a public sector market adoption perspective, the report identified certain features of how software procurements are undertaken that are serving to reinforce and encourage the continued growth of Microsoft’s hold on the sector.

Europe is currently sleepwalking into deeper dependency. Healthy and innovative markets need competition and fair procurement practices. Without change, Europe will continue being held back, and the cost to innovation and resilience will be high

This is based on an analysis of 189 tenders uploaded in TED that mention Microsoft. This analysis revealed that Microsoft is cited far more frequently than any other supplier, with an incidence share of 72% to 91% in 2023 and 89% to 100% in 2024.

“Our review suggests that certain features of the tenders, such as repeat use by existing customers, compatibility requirements, and bundling with other products and services, may contribute to Microsoft’s high shares and ongoing dependency,” the report stated.

According to the OCC, the findings underscore the dominant hold Microsoft has on the EU’s productivity software market and raise concerns about the long-term impact this may have on innovation and the adoption of artificial intelligence (AI).  

Nicky Stewart, senior advisor to the OCC, said that, without any form of intervention, it is likely Microsoft’s hold on the EU will tighten further.

“Europe is currently sleepwalking into deeper dependency. Healthy and innovative markets need competition and fair procurement practices,” said Stewart. “Without change, Europe will continue being held back, and the cost to innovation and resilience will be high.”

The report makes its debut at a time when Microsoft’s cloud market dominance is coming under scrutiny from regulators and trade bodies.

In the UK, the Competition and Markets Authority (CMA) is on the cusp of announcing the results of its long-running investigation into the inner workings of the UK cloud infrastructure services market, as the regulator has until 4 August to publish its findings.

Interim findings from the CMA have seen Microsoft – and its cloud rival Amazon Web Services (AWS) – called out for anti-competitive behaviour, pertaining mainly to the software giant’s practice of charging users more for running its cloud software in competing environments.