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Microsoft is in the crosshairs of a competition-style class action lawsuit in the United Kingdom seeking £1 billion in damages (about $1.25 billion at current exchange rates). It revolves around accusations related to fees that the software giant charged companies and other organizations to license Windows Server when they were customers of competing cloud computing platforms.
The lawsuit, filed Tuesday in the U.K.’s Competition Appeal Tribunal, alleges that AWS customers of Amazon, Google Cloud Platform (GCP) and Alibaba Cloud had to pay higher fees to use Microsoft’s software than customers of its Azure cloud computing service. .
The lawsuit comes against the backdrop of increasing competition complaints and scrutiny over cloud computing in recent years.
Just last week, Reuters It was reported that the US Federal Trade Commission opened a wide-ranging antitrust investigation into Microsoft, including its software licensing and cloud computing business.
Europe is also working to draw attention to the practices of cloud computing giants. In October 2023, the UK Competition and Markets Authority (CMA) launched a market investigation into cloud computing following a referral from communications regulator Ofcom, following its own report. April 2023 study Which cited concerns about the market — expressing particular concern about the practices of Amazon and Microsoft.
The CMA investigation remains ongoing, after the watchdog extended the statutory deadline September this yearso a report is not expected until next year. But it’s clear that the litigants are not waiting to hear its ruling on Microsoft’s rebates before filing suit.
European Union complaint
They suggest the tech giant has already paid “tens of millions in settlements” over the same practices in Europe – a reference to the settlement Microsoft reached with cloud services trade association CISPE, last July.It is said to be worth 20 million euros), which closed the EU antitrust complaint that had been filed again November 2022.
The whiff of a financial settlement can quickly flip dollar signs in the eyes of litigation funders, so the CISPE settlement is likely to have contributed to moving the UK claim forward. Although it’s also notable how high the major damages figure is compared to the amount Microsoft paid to settle the EU complaint.
The UK case is being funded by LCM Funding UK Limited, the UK office of international dispute finance provider, Litigation Capital Management (also known as LCM).
The £1bn British lawsuit was brought by competition law and digital markets regulation expert Dr Maria Luisa Stasi on behalf of “thousands” of local businesses and organizations who the class action alleges were overcharged for using Windows Server. It bears all costs (and therefore risks) of the lawsuit, thanks to financing arrangements with LCM.
Commenting on this, Louisa Stacey said: “Simply put, Microsoft is punishing UK companies and organizations for using Google, Amazon and Alibaba for cloud computing by forcing them to pay more money for Windows Server. By doing this, Microsoft is trying to force customers to use the cloud computing service.” The Azure cloud is restricting competition in this sector.
She added: “This lawsuit aims to challenge Microsoft’s anti-competitive behaviour, and push it to disclose exactly how many companies have been unlawfully sanctioned in the UK, and to return funds to organizations that were unfairly overcharged.”
Microsoft customers in the UK are included on an opt-out basis (meaning they are automatically part of the action unless they actively choose to exclude themselves). As noted above, there are no costs to being included in the lawsuit — with only the potential upside of winning damages if the lawsuit prevails (or Microsoft settles). Parties wishing to know more information about the lawsuit can refer to it Claim website.
Microsoft has been contacted to respond to the lawsuit.
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