Microsoft Faces £1.2 Billion Lawsuit in UK Over Cloud Software Licensing Practices

Microsoft is facing a significant legal challenge in the United Kingdom (UK), with a £1 billion ($1.27 billion) lawsuit alleging unfair business practices tied to its cloud software licensing. The case, filed in the Competition Appeal Tribunal, centers on claims that the tech giant unfairly charges higher fees for its Windows Server software when used with rival cloud platforms, such as Amazon Web Services (AWS), Google Cloud Platform (GCP), and Alibaba Cloud, compared to its own Azure service.

The litigation is spearheaded by Scott+Scott, a law firm specializing in competition disputes, and is being brought on behalf of numerous businesses and organizations allegedly impacted by Microsoft’s pricing strategy. According to the Wall Street Journal, the claim accuses Microsoft of leveraging its dominant position in the operating systems market to disadvantage competitors in the cloud computing space.

Broader Antitrust Scrutiny Intensifies

The lawsuit adds to the growing scrutiny Microsoft faces over its cloud computing practices. Just last week, Reuters reported that the U.S. Federal Trade Commission (FTC) had initiated a broad antitrust investigation into the company, focusing on its software licensing terms and cloud business. Meanwhile, in Europe, Microsoft has already settled similar disputes. In July, the company reportedly resolved a €20 million complaint brought by the Cloud Infrastructure Services Providers in Europe (CISPE), although the damages sought in the U.K. case are significantly higher.

Read more: Microsoft Under FTC Scrutiny for Cloud, AI, and Licensing Practices

These legal actions reflect broader concerns about the cloud computing market, which regulators on both sides of the Atlantic have been investigating. For instance, the U.K.’s Competition and Markets Authority (CMA) launched an inquiry into the sector in October 2023 following a referral from communications regulator Ofcom. The CMA’s ongoing investigation, expected to conclude next year, has focused heavily on the market power of Amazon and Microsoft.

Funding and Stakes of the U.K. Lawsuit

The U.K. lawsuit, led by competition law expert Dr. Maria Luisa Stasi, is being funded by Litigation Capital Management’s U.K. branch, ensuring that claimants face no financial risk in pursuing the collective action. According to Wall Street Journal, the case involves thousands of businesses and organizations that claim they were overcharged for Microsoft’s software due to its pricing practices.

Source: The Wall Street Journal