Microsoft Accuses Google Of Influencing Cloud Regulation In Europe

As cloud adoption scales, it is inevitable for cloud giants to find themselves fighting for the same turf. With 42.5 % of EU-based businesses buying cloud computing services in 2023, the competition between cloud service providers is increasing by the day.

The most recent case comes from Microsoft publicly accusing Google of orchestrating a clandestine campaign to influence cloud regulation in Europe. The rivalry between these Big Tech brands is intensifying with Microsoft alleging that Google’s newly formed coalition is misleading regulators and leveraging its influence on the public to push its cloud services.

So, what exactly is going on between Microsoft and Google? Let’s explore!
 

What Is Google’s Open Cloud Coalition?

The Open Cloud Coalition, a group allegedly funded and directed by Google, is at the center of this dispute. The coalition, set to publicly launch on 29th October 2024, will be led by Nicky Stewart, the public sector director of U.K.-based cloud hosting company, Civo. The coalition includes Google and other leading members like Centerprise International and Gigas, as well as small domestic cloud providers such as ControlPlane, Prolinx, Clairo and Room 101.

However, Microsoft alleges that Google has gone to great lengths to obscure its involvement in the coalition and is a front for the search engine giant. According to Rima Alaily, Microsoft’s deputy general counsel, the coalition has been established to serve Google's interests while appearing to represent smaller cloud providers.

She also expressed skepticism about the transparency of the coalition, hinting that Google may have provided incentives, such as financial backing or discounts, to recruit smaller companies.
 

What Are Microsoft's Allegations Against Google?

This is not the first time Microsoft and Google have been in fierce competition. With the growing cloud services market, the duo is vying for dominance in the Europe.

In her blog post, Rima Alaily alleges that Google is attempting to position itself as a backseat player in the Open Cloud Coalition, despite being the main financier. The accusations also highlight an almost-done settlement with the Cloud Infrastructure Services Providers in Europe (CISPE). However, Google offered cash incentives to the tune of $500 million for the group to reject Microsoft’s $22 million to address antitrust concerns.

Microsoft’s resolution was finally accepted by the CISPE members amidst claims that this coalition advocates for policies that favor smaller cloud providers. The true intent, however, was to undermine Microsoft’s cloud market position, particularly its Azure offering.

With this failure, Microsoft alleges that Google decided to create its own “astroturf lobbying organization.”
 

How Will This Impact Cloud Regulations?

Both technology companies are under significant regulatory scrutiny in Europe and the U.S. Google is currently facing multiple antitrust investigations, while Microsoft’s accusations suggest that it may be a way to divert attention from its own regulatory challenges.

In response to the allegations, a Google spokesperson confirmed the company's involvement in the Open Cloud Coalition, emphasizing that its purpose is to advocate for a fair and competitive cloud services market. Yet, Google also said Microsoft’s licensing practices locks in customers and creates negative downstream effects on cybersecurity, innovation and choice.

In fact, Google Cloud’s Vice President Amit Zavery recently told reporters that Microsoft imposes a 400% markup on customers to continue using Windows Server on non-Azure cloud providers, a fee that does not apply on Azure.

Microsoft, on the other hand, has argued that Google's complaints are baseless. Alaily explained that when a cloud service like Google builds and offers services using Microsoft’s intellectual property —such as Windows Server— it should pay them for that usage.

Microsoft also accused Google of attempting to derail its settlement with CISPE by allegedly offering $500 million to continue the litigation.

Microsoft and Google ended a six-year truce in 2021, amid legal battles that have created more tension in the cloud industry. The ongoing back-and-forth of allegations will have a major influence on the European cloud market, with neither willing to focus on its own regulatory shortcomings.
 

To Sum Up

The cloud rivalry between Microsoft and Google is unlikely to cool down anytime soon. Their strategies to dominate the European cloud services market are being closely monitored by the watchful eyes of cloud regulators.

Yet, the launch of the Open Cloud Coalition could mark a significant moment in this battle as both Microsoft and Google continue to shape public opinion and the cloud landscape.

Do you think Google's campaign will succeed in influencing cloud regulation in Europe? Or will Microsoft's allegations turn the tide in this cloud battle?

Let us know in the comments below!