Microsoft Faces £1 Billion Lawsuit For Alleged Overcharging

A British competition lawyer has on Tuesday filed a £1 billion lawsuit against Microsoft at the UK’s Competition Appeal Tribunal (CAT).

Digital markets regulation expert Dr Maria Luisa Stasi filed the complaint with her lawyers at law firm Scott+Scott, and alleged that British businesses and organisations could collectively be owed more than £1 billion ($1.27 billion) in compensation from the tech giant.

This is because Dr Stasi alleges that Microsoft overcharges customers that utilise Amazon Web Services (AWS), Google Cloud Platform or Alibaba Cloud, instead of its own Azure.

Cloud allegations

Specifically, the complaint alleges Microsoft overcharges those customers for licensing Window Server, when using rival cloud platforms.

It is alleged that Microsoft offers a cheaper price to firms running Windows Server on Azure than on rival cloud platforms. The lawsuit argues customers running the commonly-used server software are essentially being overcharged when they opt to use alternative cloud computing platforms.

The court papers filed on Tuesday claims that “Microsoft is punishing thousands of UK businesses and organisations that use rival cloud computing services from Amazon, Google and Alibaba by forcing them to pay higher licence fees for Windows Server.”

The filing alleges that all UK businesses and organisations that bought licences for Windows Server via Amazon’s AWS, Google Cloud Platform, and Alibaba Cloud may have been overcharged and will be represented in this new “opt-out” collective action.

“Put simply, Microsoft is punishing UK businesses and organisations for using Google, Amazon and Alibaba for cloud computing by forcing them to pay more money for Windows Server,” Dr Maria Luisa Stasi said.

“By doing so, Microsoft is trying to force customers into using its cloud computing service Azure and restricting competition in the sector,” said Dr Stasi. “This lawsuit aims to challenge Microsoft’s anti-competitive behaviour, push them to reveal exactly how much businesses in the UK have been illegally penalised, and return the money to organisations that have been unfairly overcharged.”

“Collective actions level the playing field and allow organisations to fight back against anti-competitive behaviour from some of the biggest companies in the world,” added Scott+Scott UK Partner James Hain-Cole, who is leading on the case against Microsoft.

“Dr Stasi’s case against Microsoft aims to do exactly that,” said Hain-Cole. “We are proud to support her efforts to secure compensation for the class and hold Microsoft to account for its conduct that affects businesses and organisations across the UK economy.”

The complaint alleges that small businesses in the UK are hit particularly hard by this alleged overcharging by Redmond, pointing to the rising cost of cloud computing in the UK.

It cited a recent poll of IT leaders in the UK that found that costs had increased by an estimated 14 percent in just a year.

Microsoft has made no public comment at the time of writing.

Other issues

Microsoft is also contending with a number of legal challenges at the moment, including the FTC’s ongoing objection to Redmond’s $69 billion acquisition of Activision Blizzard.

Last week FTC Chair Lina Khan ahead of her likely departure in January when Donald Trump assumes office, launched a sweeping investigation into Microsoft.

The FTC is reportedly concerned about Microsoft’s impact on software licensing, cybersecurity, and AI.

And last month the UK’s Competition and Markets Authority said it is preparing “behavioural” remedies addressing anti-competitive practices in the cloud industry following a months-long probe.

The Dr Maria Luisa Stasi complaint noted that Microsoft earlier this year paid €20 million to a group of cloud trade body (CISPE) and its members, which ended an EU antitrust complaint accusing the tech giant of unfair software licensing practices at its cloud division.

That deal allegedly resulted in Microsoft agreeing to charge firms the same price for running its software on smaller cloud companies’ systems as it does on its own Azure platform.