Google vs. Microsoft: EU Antitrust Settlement Battle

Google vs. Microsoft: The Antitrust Tug-of-War in the EU Cloud Market

In the intricate world of cloud services, competition is fierce, and the stakes are high. Recently, the European Union became the battleground for a significant antitrust saga involving two tech giants, Google and Microsoft. According to Bloomberg, Google attempted to thwart a Microsoft antitrust settlement by offering a lucrative alternative to a coalition of cloud providers, the Cloud Infrastructure Services Providers in Europe (CISPE).

The Offer

Bloomberg reveals that Google proposed a deal worth nearly €100 million over five years in software licenses and approximately €50 million in cash. This offer was specifically designed to ensure CISPE maintained its EU antitrust complaint against Microsoft. However, just days before CISPE settled with Microsoft, Google’s counteroffer failed to sway the group, leading to a settlement that left Google frustrated.

CISPE’s Initial Complaint

CISPE first raised their complaint in 2021, accusing Microsoft of harming the European cloud ecosystem and limiting customer choice by increasing the costs of running Microsoft software on competing cloud services. CISPE emphasized that any resolution should be sector-wide and accessible to all European cloud customers, promising transparency in any agreements.

The Settlement Details

Despite CISPE’s earlier vows, the settlement details with Microsoft were not fully disclosed. The agreement excluded major rivals like Amazon and Google, sparking further controversy. According to TechCrunch, CISPE agreed to drop their complaint after Microsoft reportedly offered around €50 million to cover CISPE’s legal fees for three years.

Google’s Strategic Move

Google’s attempt to derail the settlement reflects its broader ambitions in the cloud market. After breaking even last year, Google’s cloud operations reported a surprising €190 million in profits in Q1 2023, surpassing analyst expectations by over €50 million. As Google aims to expand its footprint in the global cloud market, challenging Microsoft’s dominance in the EU was seen as a strategic move.

Regulatory Implications

Increasing regulatory pressure on Microsoft could have potentially shifted market dynamics in Google’s favor. However, CISPE’s decision to settle with Microsoft indicates that the group saw more immediate benefits in the agreement, despite Google’s significant offer.

CISPE’s Perspective

A CISPE spokesperson, Ben Maynard, mentioned that members were presented with alternative options but ultimately voted to accept Microsoft’s offer. The decision was made with the belief that it would best serve the European cloud sector. Maynard emphasized that, although not perfect, the resolution allows European cloud providers to offer Microsoft applications on their local infrastructures, addressing the demand for sovereign cloud solutions.

Looking Ahead

For Google, the failed bid is a setback in its broader strategy to challenge Microsoft and Amazon in the cloud market. However, the company continues to support fair software licensing principles and has engaged in discussions about joining CISPE to combat anticompetitive practices.

Microsoft, on the other hand, expressed satisfaction with resolving the antitrust complaint. Brad Smith, Microsoft’s president, reiterated the company’s commitment to offering its applications and services across diverse cloud infrastructures.

In the ever-evolving cloud market landscape, this episode underscores the complexities and high stakes involved in antitrust regulations and market competition. As both tech giants continue to vie for dominance, the outcomes of such regulatory battles will significantly impact the industry’s future.