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The European cloud market has turned into a battleground for tech giants Microsoft and Google, with both companies hurling accusations over alleged backdoor tactics and competitive practices.
Microsoft, whose Azure platform is one of the largest cloud providers in Europe, has openly accused Googleof orchestrating a covert “shadow campaign” aimed at damaging Microsoft’s reputation and diverting customers.
In response, Google is highlighting what it describes as Microsoft’s restrictive licensing fees, which it says leave businesses little choice but to stay on Azure’s platform.
In the midst of these growing tensions, European regulators are keeping a close watch, and as Microsoft warns, Google may be trying to steer the regulatory narrative in its favor.
Shadowy tactics or advocacy for fair play?
Microsoft’s accusations center around a newly formed organization called the Open Cloud Coalition, set to launch this week with Google as a “backseat” member, according to Rima Alaily, Microsoft’s Deputy General Counsel. Alaily, in a recent blog post,alleged that this coalition is an “astroturf” group secretly funded and controlled by Google.
The coalition, which includes a handful of European cloud providers like Civo and Gigas, claims to promote open competition in the European cloud services market.
But according to Alaily, “Google has gone to great lengths to obfuscate its involvement, funding, and control,” positioning these smaller companies as the coalition’s public face.
Microsoft sees this as a classic case of “astroturfing”—a term used to describe what appears to be grassroots support but is, in fact, funded by corporate interests. According to Microsoft, Google “likely presented cash or discounts” to persuade European cloud providers to join the coalition.
Microsoft says it became aware of Google’s strategy when a potential recruit tipped them off, stating that Google intended the coalition to “attack Microsoft’s cloud computing business in the European Union and the United Kingdom.”
A Google spokesperson quoted by ARS denied these accusations, calling them “misleading” and stating that Google has been “very public” about its issues with Microsoft’s licensing practices. “We and many others believe that Microsoft’s anticompetitive practices lock in customers and create negative downstream effects that impact cybersecurity, innovation, and choice,” the spokesperson said, pointing to Google’s longstanding advocacy for open cloud practices.
Open cloud coalition’s public face
The Open Cloud Coalition is led by Nicky Stewart, Public Sector Director of U.K.-based cloud company Civo, who insists that the coalition is fully “transparent” about its membership.
The coalition, expected to include ten companies, states that it is not anti-Microsoft but pro-market and focused on strengthening Europe’s cloud services ecosystem.
However, Microsoft’s Alaily alleges that Google’s involvement goes well beyond a supporting role, emphasizing that “Google is the primary funder and director of the coalition’s agenda.”
TechCrunch quotes a coalition recruitment document published by Microsoft that doesn’t mention Google’s role. The coalition has yet to launch a website, although Stewart confirmed its members would be listed publicly. With Google allegedly behind this initiative, Microsoft argues, the coalition aims to manipulate regulatory authorities into scrutinizing Microsoft, rather than competing on the strength of Google’s own cloud platform.
Licensing drama: CISPE settlement and Google’s response
The ongoing cloud rivalry is not new and has roots in Microsoft’s 2019 licensing adjustments, which made it more expensive for businesses to run Microsoft software on non-Azure platforms. This prompted the Cloud Infrastructure Services Providers in Europe (CISPE), a non-profit trade association that includes Amazon Web Services (AWS), to file a complaint with the European Commission, alleging that Microsoft was unfairly tethering clients to its own cloud.
In July, Microsoft settled with CISPE, paying $22 million and making adjustments to help smaller cloud providers run Microsoft software on their own infrastructure. However, AWS, Google, and other major providers were excluded from the deal, reportedly fueling Google’s frustration and triggering further action.
In September, Google filed its own complaint against Microsoft with the European Commission, accusing the company of using anti-competitive practices to keep customers on Azure. Google’s complaint took aim at Azure’s high licensing fees, reportedly charging customers up to 400% more to run Windows Server on competing platforms.
“It’s outrageous that Microsoft continues to punish customers who choose to use a different cloud provider,” Google Cloud Vice President Amit Zavery told reporters. “Fundamentally, Google’s argument is that it should not have to pay Microsoft when it builds and offers cloud services using our intellectual property,” Microsoft’s Alaily countered. “If a streaming service like Netflix includes a movie, they pay for the right. Software and the cloud are no different.”
The race for regulatory approval
These developments come as European and U.K. regulators ramp up their scrutiny of cloud computing practices.
The European Commission is expected to soon see a leadership transition, and the U.K.’s Competition and Markets Authority (CMA) is conducting an investigation into cloud vendor practices, with AWS and Microsoft as focal points.
The CMA’s findings, expected in late 2025, could significantly reshape the regulatory landscape.
Microsoft has argued that Google’s tactics are an attempt to shift attention away from Google’s own regulatory troubles. Google faces at least 24 antitrust investigations worldwide, including a high-stakes case in the U.S., where the Department of Justice has accused Google of monopolistic practices in search and search advertising.
“Google’s strategy here is about distracting from its regulatory scrutiny by tearing down a competitor,” Alaily claimed. “At a time when Google should be focused on addressing legitimate questions about its business, it’s turning its resources towards attacking ours.”
What’s at stake for Google and Microsoft?
Both companies have a lot riding on Europe’s fast-growing cloud market. As revenue from its core digital ad business has slowed, Google has increasingly relied on its cloud services for growth.
In 2023, Google Cloud even turned a profit for the first time, contributing significantly to the company’s overall earnings. This shift underscores Google’s investment in the cloud, with Microsoft’s Alaily suggesting that Google’s “shadow campaigns” are a way to accelerate its own platform’s adoption by shifting focus from its own legal issues to Microsoft’s.
Meanwhile, Microsoft’s Azure has become one of the leading cloud platforms globally, and the company is intent on maintaining its stronghold, particularly in Europe. The stakes are high: European regulators have already forced several tech giants to make changes to their operations, and the prospect of new regulations looms large. For Google and Microsoft, securing favor with EU regulators could mean the difference between costly adjustments or business as usual.
What’s next?
The Open Cloud Coalition’s launch, along with Google’s antitrust complaint and Microsoft’s settlement, mark a new chapter in this ongoing saga.
As European and U.K. authorities continue to investigate cloud practices, the outcome could lead to significant changes for both companies.
As these cloud titans spar, European businesses and consumers may ultimately benefit from any resulting enhancements in cloud services and competition.
Both Microsoft and Google say they’re committed to an open cloud market, but each argues that the other is undermining that goal.
With accusations flying and regulatory scrutiny intensifying, Europe is now a key battleground where these tech giants will test their influence, resources, and regulatory resilience.
For now, all eyes are on Brussels and London to see which arguments will sway regulators and where the battle for cloud dominance in Europe will head next.