Microsoft Accuses Google of Using 'Shadow Tactics' in EU Cloud Market Battle

The ongoing battle between tech giants Microsoft and Google over the European cloud computing market is escalating.

On Monday, Microsoft's Deputy General Counsel, Rima Alaily, published an article titled "Google's Shadow Campaigns" on the Microsoft website, accusing Google of using unfair means to undermine Microsoft. Alaily pointed out that Google is organizing the establishment of an EU cloud computing vendors alliance called the "Open Cloud Coalition," which aims to "discredit Microsoft's reputation among competitors and policymakers and mislead the public."

Alaily wrote, "It seems Google has two ultimate goals in its astroturfing efforts: distract from the intense regulatory scrutiny Google is facing around the world by discrediting Microsoft and tilt the regulatory landscape in favor of its cloud services rather than competing on the merits."

Alaily claimed that although Google did not list itself as a major funder of the Open Cloud Coalition, a company that refused to join the alliance revealed to Microsoft that the organization "will be directed and largely funded by Google for the purpose of attacking Microsoft's cloud computing business in the European Union and the United Kingdom."

The article published by Microsoft also pointed out that Google is still "directly or indirectly" lobbying competition regulators around the world to impose restrictions on large cloud service providers, especially Microsoft and Amazon AWS. Although Google's data center operational capacity reached 35,000 megawatts in 2023, surpassing all other cloud service providers, Google is trying to position itself as neither a large nor small cloud service provider to avoid regulation.

At the same time, Microsoft pointed out that Google "is funding – directly and indirectly – various industry commentators and academics to attack Microsoft and author 'studies' that can be cited to discredit Microsoft," asking them to write research that can be used to discredit Microsoft in antitrust cases.

At the end of 2022, the European Cloud Infrastructure Service Providers (CISPE) filed a lawsuit with the European Commission, accusing Microsoft of implementing new contract terms in October of that year that had an adverse effect on the European cloud computing ecosystem. CISPE members include Amazon and several smaller EU cloud computing vendors.

In July of this year, Microsoft announced that it had reached a €20 million agreement with CISPE and agreed to allow CISPE members to run Microsoft's software. CISPE has confirmed that it will withdraw the lawsuit filed with the European Commission and will not initiate further complaints on these issues in Europe or elsewhere.

Subsequently, foreign media reported that Google had planned to offer a €470 million financial reward in the hope that CISPE would refuse to settle with Microsoft. However, CISPE rejected Google's proposal.

In September of this year, Google announced that it had filed an antitrust lawsuit with the European Commission, accusing Microsoft of using restrictive licensing terms to lock in customers and control the cloud computing market, curbing competition in the tens of billions of dollars cloud computing industry. In the lawsuit, Google listed several improper practices by Microsoft. For example, Microsoft requires customers to pay up to 400% more when using Windows Server on other cloud platforms, while there are no additional fees for choosing Microsoft's own Azure cloud platform.

This week, Google and Microsoft are about to release their third-quarter earnings, and the market will closely monitor the growth trends of the two companies' cloud businesses. Google will release its earnings after the US stock market closes on October 29th, and Microsoft will release its earnings after the US stock market closes on October 30th.