Microsoft has responded to claims from AWS and Google regarding the high costs associated with running Windows Server in their cloud environments. The technology giant argues that the pricing structure is a necessary aspect of competition and protects its intellectual property.
Competition and Pricing Structure
According to Microsoft, AWS and Google are urging the UK’s Competition and Markets Authority (CMA) to intervene and limit the prices Microsoft charges for its software licenses. The CMA previously indicated that competition in the UK cloud computing sector could improve and pointed to Microsoft’s pricing practices as a potential barrier.
Microsoft asserts that clients using non-Azure clouds may pay up to four times more for Windows Server licenses compared to those on Azure. The company contends that this pricing strategy is not an act of foreclosure but rather a competitive tactic that benefits UK customers.
CMA’s Findings
The CMA has expressed concerns that Microsoft’s conduct may be harming competition in cloud services. It noted that Microsoft has the capability and incentive to limit access to its software for competitors, which could disadvantage AWS and Google.
In its defense, Microsoft highlights the competitive nature of the cloud market, where it competes with AWS and Google for business. The company claims it offers discounts to customers deploying workloads on Azure that utilize its software, which is intended to make its services more attractive.
Market Dynamics
Despite the ongoing disputes, Microsoft maintains a significant presence in the UK cloud market, accounting for 30 to 40 percent of cloud spending. AWS leads the market with about 50 percent share, while Google Cloud holds a smaller portion.
The CMA is currently deliberating whether to utilize its digital markets powers to address the barriers identified, including licensing practices and egress fees. A final decision is expected later this year.
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