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Microsoft Dodges EU Antitrust Probe in Deal with Cloud Lobby

A sign hangs on the exterior of the Microsoft Corp. Fifth Avenue flagship store in New York, U.S., on Saturday, July 14, 2018. Mark Kauzlarich/Bloomberg (Mark Kauzlarich/Bloomberg)

(Bloomberg) -- Microsoft Corp. has avoided the threat of a lengthy European Union antitrust probe into its cloud business after it brokered a deal with an Amazon.com Inc.-backed trade lobby that had complained about its software license agreements. 

The association of Cloud Infrastructure Services Providers in Europe struck a deal with Microsoft on Wednesday that will see the lobby withdraw its complaint to the EU’s competition department, Microsoft said in a statement. CISPE had argued Microsoft made it too difficult for customers to change cloud providers by tying its business software to its Azure cloud services. 

“After working with CISPE and its European members for more than a year, I am pleased that we’ve not only resolved their concerns of the past, but also worked together to define a path forward that brings even more competition to the cloud computing market in Europe and beyond,” Brad Smith, Microsoft’s president, said in the statement. 

The agreement will allow CISPE members to use enhanced Microsoft Azure features, with service providers permitted to offer Microsoft applications and services on their local cloud infrastructures, the association said in a statement.  

A European Commission spokesperson said it would assess the impact of the settlement on competition in European cloud markets. 

The deal however was not offered to CISPE’s largest member, Amazon Web Services or to Google’s Cloud Platform and Alibaba Group Holding Ltd’s cloud service, CISPE said. 

AWS said in a statement that the settlement “does nothing for the vast majority of Microsoft customers who are still unable to use the cloud of their choice in Europe and around the world.”   

The agreement between Microsoft and CISPE puts an end to a long-running back-and-forth between the parties, that saw Microsoft make a spate of concessions in order to appease the concerns of cloud service providers. On the heels of those complaints, EU regulators had been informally asking market rivals and customers about Microsoft’s conduct. 

“We are exploring our options to continue to fight against Microsoft’s anti-competitive licensing in order to promote choice, innovation, and the growth of the digital economy in Europe,” Amit Zavery, head of platform at Google Cloud, said.

Microsoft is no stranger to EU antitrust scrutiny and in previous decades fought a long battle with regulators over abuses linked to the market dominance of Windows.

More recently, its $13 billion investment into OpenAI Inc. is the focus of an informal investigation by regulators, after concerns emerged about the AI firm’s exclusive use of Microsoft’s cloud technology. In June, the EU also accused the company of abusing its market power by bundling the Teams video-conferencing app to its other business software.

(Updates with European Commission comment in fifth paragraph.)

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