A U.K. competition class-action lawsuit is targeting Microsoft, with a demand for £1 billion (approximately $1.25 billion at current exchange rates) in damages
It is centered on allegations regarding the fees that the software behemoth imposed on businesses and other organizations for the licensing of Windows Server while they were customers of competing cloud computing platforms.
The suit, which was submitted on Tuesday to the Competition Appeal Tribunal in the United Kingdom, asserts that Microsoft’s software was subject to higher fees for customers of Amazon’s AWS, Google Cloud Platform (GCP), and Alibaba Cloud in comparison to those of its own Azure cloud computing service.
In recent years, there has been an increase in competition complaints and scrutiny of cloud computing, which has led to the litigation.
Last week, Reuters reported that the U.S. Federal Trade Commission had initiated a comprehensive antitrust investigation of Microsoft, which encompassed its software licensing and cloud computing operations.
Additionally, Europe has been increasing its scrutiny of the practices of cloud computing titans. The U.K.’s Competition and Markets Authority (CMA) initiated a market investigation into cloud computing in October 2023 in response to a referral from the communications regulator Ofcom.
This investigation was initiated following Ofcom’s own April 2023 study, which had identified concerns with the market, with a particular emphasis on the practices of Amazon and Microsoft.
The CMA’s investigation is still ongoing, as the watchdog extended the statutory deadline in September. Consequently, it is not anticipated to provide a report until the following year.
However, it is evident that the litigants are not waiting for the court’s decision regarding Microsoft’s discounts before submitting a lawsuit.
Complaint to the European
They suggest that the technology giant has already paid “tens of millions in settlements” over the same practices in Europe. They cite a settlement Microsoft made with cloud services trade association CISPE in July, which was reportedly worth €20 million and resolved an EU antitrust complaint filed in November 2022.
The CISPE settlement is likely to have played a role in the progression of the U.K. claim, as the mere mention of a financial settlement can rapidly turn dollar signs into dollar signs in the eyes of litigation funders.
However, it is also noteworthy that the prominent damages figure is significantly higher than the amount that Microsoft reportedly paid to resolve 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 (aka LCM).
Dr. Maria Luisa Stasi, an expert in digital markets regulation and competition law, has filed a billion-pound lawsuit in the United Kingdom on behalf of “thousands” of local businesses and organizations that the collective action claims were overcharged for the use of Windows Server.
She assumes the full cost of the litigation, and as a result, the risk, as a result of the financing arrangement with LCM.
Luisa Stasi stated in a statement that Microsoft is penalizing U.K. businesses and organizations for utilizing Google, Amazon, and Alibaba for cloud computing by requiring them to pay a higher price for Windows Server.
This is an attempt by Microsoft to compel consumers to utilize its cloud computing service, Azure, and to limit competition in the industry.
“The objective of this lawsuit is to challenge Microsoft’s anti-competitive behavior, compel them to disclose the precise amount of illegal penalties that businesses in the United Kingdom have received, and remit the funds to organizations that have been unfairly overcharged,” she continued.
Microsoft customers in the United Kingdom are being incorporated on an opt-out basis, which means that they are inevitably included in the action unless they actively choose to exclude themselves.
As previously mentioned, there are no expenses associated with participating in the litigation; the sole potential benefit is the potential for compensation if the lawsuit is successful (or Microsoft settles).
Entities interested in obtaining additional information regarding the lawsuit may consult the claim website.
A response to the lawsuit has been requested from Microsoft.
