Microsoft cloud computing amendments have been met with scathing criticism from its competitors Amazon and Google. The tech giants called out the software company for changing rules to limit competition and discourage customers from switching to rival cloud service providers.
The amended rules for Microsoft cloud computing will go into effect on October 1 and the company affirms that it will make it easier for cloud service providers to compete. In May, Microsoft President Brad Smith had announced the upcoming changes but had not given the with effect date.
Cloud Computing and Competition in the EU
On August 30, in a written statement, the company revealed that Microsoft has taken steps to address the concerns of the European Union(EU) with the European Cloud Principles, which will change software licensing terms.
Amazon, Google, Alibaba, and Microsoft’s own cloud services will be excluded from the deals. Microsoft’s move comes after the EU started questioning all market players, following an appeal by cloud service competitors from the EU who took their concerns to the EU antitrust regulators. The Microsoft cloud computing amendments appear to be a preventive measure to avoid a lengthy probe by the EU’s stringent antitrust regulators.
Microsoft has previously found itself in trouble with the EU antitrust watchdogs and been fined almost $1.6 billion in the past decade for various infringements.
In May, Smith wrote, “While a free market and rapid technological change inevitably lead to both new successes and challenges, we recognize that it is important to support a competitive environment in the European cloud provider market, in which smaller competitors have the opportunity to thrive.” The new initiative will benefit cloud providers in the EU and the UK.
Microsoft will also be building a new team that will work with European cloud providers to help them “achieve their goals, provide licensing, and product roadmap support,” and continue to support their growth around cloud solutions. An on-going feedback mechanism will also be implemented to nurture the providers and to ensure that Microsoft is in tune with their needs. In a statement, the company said that the Microsoft Cloud Solution Provider program is designed to empower cloud service providers to explore more economic opportunities rather than just promote Microsoft’s services and products.
Microsoft’s Competing Strategies Criticized
In an email, a spokesperson for the cloud service unit AWS told Reuters, “Microsoft is now doubling-down on the same harmful practices by implementing even more restrictions in an unfair attempt to limit the competition it faces – rather than listening to its customers and restoring fair software licensing in the cloud for everyone.”
Meanwhile, Google’s vice president for government affairs and policy Google Cloud Marcus Jadotte did not hold back on the criticism. He took to Twitter to voice his grievance with the “elastic computing without contractual lock-ins.” Jadotte demanded better service, arguing that Microsoft must enable customers to pick and choose the technology they like instead of forcing their hand by making them select deals that work well with the software company.
Microsoft CEO Satya Nadella had assured stakeholders in July that the company is innovating cloud services to provide best of category products and suite solutions to discerning customers and that they will launch 10 more data centers to help partners around the world.
On July 26, Microsoft announced its fourth quarter results for the quarter ended June 30, 2022. Amy Hood, executive vice president and chief financial officer of Microsoft, revealed that Microsoft Cloud revenue was $25 billion, up 28% year over year, and commercial bookings for cloud grew by 25%. She reiterated the company’s commitment to the cloud platform and mentioned that the software firm will invest in strategic areas to drive future growth.
