Microsoft settles antitrust complaint with CISPE for $21.7M

Microsoft settles antitrust complaint with CISPE for $21.

• Regarding cloud computing licensing practices, Microsoft settled an antitrust complaint proposed by CISPE with a €20 million ($21.7 million) deal.
• The deal has been criticised by Microsoft’s major rivals, Amazon and Google, questioning the fairness of the deal.

OUR TAKE
Regulating the market through fines is only a temporary solution. With the more severe regulation posed by the EU’s antitrust organisation, the companies should watch out for their actions. The market must be fairer so that it can gain a comprehensive and integrated development.
–Ashley Wang, BTW reporter

What happened

In order to avoid the European Union’s antitrust investigation and heavy financial penalties, Microsoft has reached a €20 million ($21.7 million) deal to resolve the complaint regarding its cloud computing licensing practices.

The complaint was lodged by the Cloud Infrastructure Services Providers in Europe (CISPE), which includes Amazon and several smaller EU cloud providers, in late 2022. They alleged that Microsoft’s contractual terms, imposed on October 1, were detrimental to Europe’s cloud computing ecosystem.

This industry has been under antitrust scrutiny both in Europe and the United States. After over a year of negotiations, Brad Smith, Microsoft President, expressed satisfaction in resolving CISPE’s concerns and fostering greater competition in the cloud market.

As part of the settlement, Microsoft will create a product enabling CISPE members to operate Microsoft software on their platforms within Microsoft’s Azure cloud infrastructure, matching Microsoft’s pricing. This product is expected within nine months. Additionally, Microsoft will compensate CISPE members for lost revenues related to licensing costs over the past two years, although specific financial details were not disclosed. Sources disclosed that Microsoft’s offer totals approximately $21.7 million.

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Why it’s important

CISPE confirmed it would withdraw its EU complaint and refrain from initiating or supporting related complaints in Europe and elsewhere. Francisco Mingorance, CISPE Secretary General, stated that the agreement would create a level playing field for European cloud service providers and their customers.

Despite the temporary peace, Microsoft’s settlement with CISPE over cloud licensing practices is just a slap on the wrist for a tech giant whose anti-competitive practices threaten the fabric of Europe’s digital ecosystem. Microsoft, while trailing Amazon in the cloud computing sector, remains ahead of Alphabet’s Google. There is a delicate atmosphere between the three companies. While Microsoft escaped a full EU investigation for the moment, Amazon Web Services (AWS) and Google remained on the sidelines, questioning the fairness of the deal.

This solution does little to address the root of the problem, i.e., monopoly power stifles innovation. Global regulators should take a tougher stance to ensure a healthy and sustainable market.