In a dramatic escalation of the ongoing tech rivalry, Microsoft has accused Alphabet Inc.’s subsidiary Google of engaging in covert lobbying campaigns aimed at sabotaging its cloud computing business. This accusation comes at a time when major tech companies are facing increased scrutiny from global regulators.
Rima Alaily, Corporate Vice President and Deputy General Counsel at Microsoft, alleged that Google is setting up a new ‘astroturf group’ in Europe specifically designed to criticize Microsoft’s practices to competition authorities and policymakers. This organization, according to Microsoft, will be led by Nicky Stewart, who has previously filed complaints against Microsoft and Amazon Web Services with the UK Competition and Market Authority. Alaily revealed in a detailed post that Google has hired a lobbying and communications agency in Europe to create and operate this group and recruited several small European cloud providers to join.
The allegations highlight the intense competition in the cloud computing market. Microsoft claims that Google is currently facing at least 24 antitrust investigations across major digital markets globally. To further support its claims, Microsoft provided a detailed list of actions it believes Google has taken:
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Offering Millions for Opposition:
Microsoft alleges that Google recently attempted to bribe members of CISPE (Cloud Infrastructure Services Providers in Europe) with approximately $500 million in cash and credits to reject a settlement with Microsoft and continue their litigation.*
U.S.-Based Coalition:
Microsoft claims that Google has established a U.S.-based organization called the Coalition for Fair Software Licensing with the sole purpose of criticizing Microsoft’s cloud business practices.*
Funding Critics:
Microsoft alleges that Google is funding industry commentators and academics to author critical studies about Microsoft’s cloud business.*
Formal Complaint:
Microsoft revealed that Google filed a formal complaint with the European Commission in September regarding Microsoft’s software licensing practices for cloud services.While Google has not yet responded to these accusations, Microsoft defended its licensing practices, stating that when Google utilizes Microsoft’s intellectual property, such as Windows Server, in its cloud services, it should pay for that right. Alaily explained that it’s similar to how streaming services like Netflix and Disney pay for the rights to include movies in their services.
Furthermore, Microsoft challenged Google’s self-positioning as a smaller player in the cloud computing market. Microsoft highlighted that Google achieved a 29% growth in its cloud business last quarter and invested $13 billion in infrastructure growth, with an operational data center capacity of 3,500 MW in 2023.
In response to these accusations and challenges, Microsoft emphasized its willingness to adapt its practices based on “credible, legitimate, and addressable concerns.” As an example, they cited recent changes to their business and enterprise productivity suites, which were made in response to feedback from the European Commission.
The outcome of this conflict remains to be seen, but it underscores the intense competition and potential legal battles brewing within the tech industry, particularly in the rapidly growing cloud computing market.
