Microsoft Settles $21.7 Million with European Cloud Firms to Avert EU Investigation

Microsoft has reached a settlement worth $21.7 million with the European Association of Cloud Infrastructure Service Providers (CISPE), in an effort to avoid a formal EU investigation into its cloud-related practices. According to Reuters, the agreement addresses antitrust concerns from CISPE, which includes major players like Amazon Web Services (AWS) and smaller cloud firms. Settlement Terms and Concessions The deal includes both monetary compensation and strategic adjustments. Microsoft has agreed to allow CISPE members to use its software, featuring an updated Azure Stack HCI designed for European providers. This version will include multi-session virtual desktop infrastructure on Windows 11, complimentary Extended Security Updates (ESU), and flexible licensing for SQL Server. Although part of CISPE, AWS chose not to engage in the settlement discussions. According to an AWS representative, the company continues to support efforts globally to challenge Microsoft’s competitive practices. AWS remains dedicated to promoting fair competition within the cloud service sector. It is worth remembering that AWS is the dominant provider in the cloud market.  Effects on the European Commission This agreement grants Microsoft a nine-month window to roll out the new software solutions. While this is intended to preempt a formal investigation by the European Commission, it is unclear if the settlement will sufficiently address all concerns. CISPE had initially lodged complaints claiming Microsoft’s cloud business practices were anti-competitive. The negotiations kicked off in April last year following CISPE’s antitrust complaint from nearly two years prior. The main issue arose from Microsoft’s 2019 licensing change that increased costs for using its enterprise software on rival cloud platforms. The settlement includes a memorandum signed by both CISPE members and Microsoft, committing the latter to make specified changes. Additionally, CISPE plans to launch an independent European Cloud Observatory (ECO) to oversee the implementation and continuous review of these adjustments. Francisco Mingorance, CISPE’s secretary general, characterized the settlement as a favorable outcome for European cloud providers. Nonetheless, it does not include major providers like Google and Alibaba, who aren’t CISPE members. Both AWS and Google have criticized the settlement, arguing it doesn’t fully address Microsoft’s anti-competitive practices. CISPE confirmed that Microsoft agreed to a “lump sum” payment to cover litigation and campaign expenses, although the exact amount wasn’t disclosed.