Microsoft is in the crosshairs of a U.K. competition class action-style lawsuit that’s seeking £1 billion (around $1.25 billion at current exchange rates) in damages. It revolves around accusations related to fees the software giant charged businesses and other organizations for licensing Windows Server when they were customers of rival cloud computing platforms.
The suit, which was filed Tuesday in the U.K.’s Competition Appeal Tribunal, alleges that customers of Amazon’s AWS, Google Cloud Platform (GCP), and Alibaba Cloud had to pay higher fees to use Microsoft’s software compared to customers of its own Azure cloud computing service.
The litigation comes against a background of rising competition complaints and scrutiny on cloud computing in recent years.
Just last week, Reuters reported that the U.S. Federal Trade Commission had opened a broad antitrust probe of Microsoft, including its software licensing and cloud computing business.
Europe has also been dialing up attention on practices by cloud computing giants. Back in October 2023, the U.K.’s Competition and Markets Authority (CMA) launched a market investigation into cloud computing after a referral by the communications regulator Ofcom, following its own April 2023 study that had flagged concerns with the market — expressing particular concern over Amazon’s and Microsoft’s practices.
The CMA’s investigation remains ongoing, after the watchdog extended the statutory deadline this September, so it’s not expected to report back until next year. But the litigants evidently aren’t waiting to hear its verdict on Microsoft’s discounts before filing suit.
EU complaint
The tech giant has already paid “tens of millions in settlements” over the same practices in Europe, they suggest — pointing to a settlement Microsoft made with cloud services trade association CISPE in July (reportedly worth €20 million), which closed an EU antitrust complaint filed in November 2022.
The whiff of a financial settlement can quickly flip dollar signs into the eyes of litigation funders, so the CISPE settlement is likely to have contributed to driving forward the U.K. claim. Though it’s also notable how much higher the headline damages figure is compared to how much Microsoft reportedly paid to settle the EU complaint.
The U.K. suit is being funded by LCM Funding UK Limited, the U.K. office of the international dispute finance provider, Litigation Capital Management (LCM).
The billion-pound U.K. suit has been filed by competition law and digital markets regulation expert, Dr. Maria Luisa Stasi, on behalf of “thousands” of local businesses and organizations that the collective action alleges were overcharged for using Windows Server. She takes on all the costs (and therefore risk) of the suit, thanks to the financing arrangement with LCM.
Commenting in a statement, Luisa Stasi said: “Put simply, Microsoft is punishing U.K. businesses and organisations for using Google, Amazon and Alibaba for cloud computing by forcing them to pay more money for Windows Server. By doing so, Microsoft is trying to force customers into using its cloud computing service Azure and restricting competition in the sector.”
“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,” she added.
Microsoft customers in the U.K. are being 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 for being included in the litigation — with only the potential upside of winning damages if the suit prevails (or Microsoft settles). Entities wanting to find out more information about the suit can refer to the claim website.
Microsoft has been contacted for a response to the lawsuit.