Microsoft Corp. MSFT has accused Alphabet Inc. GOOGL GOOG subsidiary Google of orchestrating covert lobbying campaigns designed to undermine its cloud computing business while deflecting attention from its regulatory challenges.
What Happened: Rima Alaily, Corporate Vice President and Deputy General Counsel at Microsoft, alleged that Google is launching a new “astroturf group” in Europe specifically aimed at criticizing Microsoft’s practices to competition authorities and policymakers.
The organization, according to Microsoft, will be led by Nicky Stewart, who has previously filed complaints against Microsoft and Amazon.com Inc.’s AMZN Amazon Web Services with the UK Competition and Market Authority.
“Google pivoted to stand up its own astroturf lobbying organization. It hired a lobbying and communications agency in Europe to create and operate the organization. And it recruited several small European cloud providers to join,” Alaily wrote in the detailed post.
The allegations come amid heightened scrutiny of major tech companies by regulators worldwide. According to Microsoft’s count, Google currently faces at least 24 antitrust investigations in major digital markets globally.
Among the specific allegations, Microsoft claims:
- Google recently attempted to offer members of CISPE (Cloud Infrastructure Services Providers in Europe) approximately $500 million in cash and credits to reject a settlement with Microsoft and continue litigation.
- Google has established a U.S.-based organization called the Coalition for Fair Software Licensing to criticize Microsoft’s cloud business practices.
- The tech giant is funding industry commentators and academics to author critical studies about Microsoft.
- Google filed a formal complaint with the European Commission in September regarding Microsoft’s software licensing practices for cloud services.
Google did not immediately respond to Benzinga's request for comment.
Why It Matters: Microsoft defended its licensing practices, arguing that when Google builds cloud services using Microsoft’s intellectual property, such as Windows Server, it should pay for that right.
“When a streaming service, like Netflix or Disney, includes a movie in their service, they pay for that right. They don’t get a credit or discount if a subscriber happens to own a DVD of the same movie,” Alaily explained.
The blog post also addressed Google’s cloud computing capabilities, challenging Google’s positioning as a smaller player in the market. Microsoft noted that Google achieved 29% growth in its cloud business last quarter and invested $13 billion in infrastructure growth, with an operational data center capacity of 3,500 MW in 2023.
In response to these challenges, Alaily emphasized Microsoft’s willingness to adapt its practices based on “credible, legitimate, and addressable concerns,” citing recent changes to its business and enterprise productivity suites in response to European Commission feedback.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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