Google formally accuses monopolist Microsoft of trapping people in its cloud

Updated Google, the target of numerous antitrust investigations, has complained to the US Federal Trade Commission about rival Microsoft's alleged anti-competitive practices.

The Chrome giant told the FTC in a letter on Wednesday that Microsoft uses software licensing restrictions to keep customers locked into its cloud computing services. More than two decades ago, as you may recall, the Windows biz was found to have engaged in unlawful anticompetitive behavior with regard to personal computers.

The letter, obtained by CNBC, takes issue with Microsoft using its Windows Server and Office products to keep clients on Azure, and argues that Microsoft's control presents a national security risk.

As The Register reported earlier this month, Google has raised similar objections to European regulators. Essentially, Microsoft charges third-party cloud providers extra to run its software, a cost that customers do not bear if they run the same software on Microsoft's Azure cloud platform. This state of affairs evidently follows from a Microsoft licensing change enacted in 2019.

Google's letter was prompted by the FTC's March 22 request for comment on how the business practices of cloud computing providers affect competition and data security. And it has not been the only submission to raise concerns about cloud platform competition.

"Cloud providers once focused on customer retention via innovation and customer satisfaction," observed Corey Quinn, chief cloud economist at a consultancy called The Duckbill Group, in a comment submitted on Tuesday to the FTC.

"Today, they have enough deterrent business practices in place to make switching providers an expensive Herculean undertaking. Fundamentally, there’s enough differentiation at higher levels of service to create an effective form of customer lock-in. At the lower levels of service, there are other barriers such as idiosyncratic security and identity abstractions, expensive data egress fees, and contractual disincentives."

Quinn said that there's been a steady shift toward making migrations to other providers more painful, and that "various cloud providers start to look a lot more anticompetitive with every passing year."

The way data egress is priced, Quinn said, it's rarely affordable to move significant amounts of data between cloud providers.

The Democratic majority staff 2020 report on competition in digital markets from the US House Subcommittee on Antitrust found that anticompetitive behavior is perceived to be a problem among various cloud platforms, not just Microsoft Azure.

"Market participants have raised concerns that cloud infrastructure providers can preference their own offerings, or offer these products with exceedingly steep discounts, making it difficult for third-party software vendors with fewer products to compete," the report [PDF] says.

• Big cloud rivals hit back over Microsoft licensing changes
• Top cloud players reject Microsoft's attempt to settle EU licensing complaint
• Microsoft among software titans under spotlight for restrictive licensing
• Microsoft hikes cost of licensing its software on rival public clouds, introduces Azure 'Dedicated' Hosts

The Coalition for Fair Software Licensing (CFSL), a lobbying group supported by unidentified IT firms, asked the FTC to pay more attention to what Microsoft is doing.

"Rather than supporting customer choice, Microsoft is unfairly leveraging customer dependencies to its own benefit," the group said in its public comment.

"Specifically, Microsoft is using its market power and restrictive and discriminatory licensing terms to: coerce customers into using Azure cloud infrastructure and lock them into the Azure ecosystem; tie products in the vertical stack of Microsoft ecosystem into an ever-growing suite of services, regardless of customer preferences, to advantage its products over competitors; limit integration capabilities of competing services on equal terms with its own products; and set its own products as defaults."

CFSL said Microsoft behavior largely dates back to its 2019 licensing change.

"This change presented existing software customers with a Hobson’s choice: forego their previously purchased (often perpetual) software licenses and incur the additional cost of purchasing a second license to use the cloud provider of their choice; or migrate to Microsoft cloud services and have previously purchased licenses (and their beneficial terms) transferred to cloud-based subscription licenses at no additional cost," the group said.

Microsoft's conduct has also been challenged in Europe by the Cloud Infrastructure Service Provider of Europe (CISPE) trade association, which counts AWS as a member. The group filed a complaint against Microsoft in November and that litigation is ongoing.

Microsoft did not immediately respond to a request for comment. ®

Updated to add on June 22

In a statement received after this story was published, a Microsoft spokesperson told us: