Microsoft Accuses Google of Running Covert Campaigns to Influence EU Cloud Regulation

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Microsoft Accuses Google of Running Covert Campaigns to Influence EU Cloud Regulation
30 Oct 2024
5 min read

News Synopsis

Microsoft has publicly leveled allegations against Google, accusing the company of running covert, so-called “shadow campaigns” designed to weaken Microsoft’s influence and tilt regulatory efforts in favor of Google’s cloud business. The accusation was shared in a blog post on Monday by Rima Alaily, Microsoft’s deputy general counsel, signaling a stark escalation in the ongoing rivalry between the two tech giants.

The Allegations: Google’s Open Cloud Coalition and “Astroturfing”

According to Microsoft, Google’s strategy involves the formation of a new lobby group called the Open Cloud Coalition. Microsoft claims this group aims to alter cloud regulations in Europe to benefit Google’s own cloud services. Alaily described the coalition as a group orchestrated by Google but obscured behind the public involvement of smaller cloud providers.

In her blog post, Alaily wrote, “This week an astroturf group organized by Google is launching. It is designed to discredit Microsoft with competition authorities and policymakers and mislead the public. Google has gone through great lengths to obfuscate its involvement, funding, and control, most notably by recruiting a handful of European cloud providers to serve as the public face of the new organization.”

Google Responds: Concerns Over Microsoft’s Licensing Practices

In response to Microsoft’s assertions, Google commented on the transparency of its cloud operations and expressed concern about Microsoft’s own market behavior. According to a Google Cloud spokesperson, the company has been “very public” about its concerns regarding Microsoft's cloud licensing practices. The spokesperson stated, “We and many others believe that Microsoft's anticompetitive practices lock in customers and create negative downstream effects that impact cybersecurity, innovation, and choice.”

The Open Cloud Coalition’s Stance

The Open Cloud Coalition, while described as a “shadow campaign” by Microsoft, has argued that it operates transparently. Nicky Stewart, a senior advisor to the coalition, emphasized that the coalition is “not anti any one company” but is rather “a pro-market coalition that is focused on advocating for principles that will strengthen the marketplace for cloud services in Europe, principally openness and interoperability.” Stewart further invited any companies that share the coalition's values to join their initiative.

The Cloud Market Conflict: Intensifying Rivalry Between Microsoft and Google

Microsoft’s decision to go public with its accusations against Google signifies rising tensions between the two tech titans. Last month, Google lodged an antitrust complaint with the European Commission against Microsoft, claiming that Microsoft’s cloud licensing tactics unfairly locked customers into its Azure cloud infrastructure.

Microsoft and Google’s rivalry spans multiple domains, including cloud computing, artificial intelligence, search, and productivity software. Although both are leading players in the cloud market, Microsoft’s Azure consistently outperforms Google Cloud in terms of revenue. For instance, in the second quarter of 2024, Google Cloud generated $10.35 billion, while Microsoft’s Azure, part of its Intelligent Cloud division, reported a more robust $28.5 billion.

Market Leaders: How Amazon Web Services (AWS) and Other Cloud Providers Compare

While the competition between Google and Microsoft intensifies, Amazon Web Services (AWS) maintains a dominant position in the global cloud market. In 2023, Google Cloud’s annual revenue was reported at $33.7 billion, compared to Microsoft’s Intelligent Cloud division, which reached $96.8 billion. AWS continues to lead in overall market share, setting a high benchmark for competitors.

Regulatory Scrutiny on Google: An Ongoing Battle with Antitrust Authorities

Beyond cloud infrastructure, Google is facing significant regulatory scrutiny across its various businesses, including search and mobile applications. The U.S. Department of Justice is currently considering a move to break up Google’s operations, months after a judge ruled that the company had violated antitrust laws through its dominant search engine practices.

Additionally, Google’s Android app store has come under scrutiny following a ruling in the high-profile Epic Games antitrust case. In this ruling, the judge ordered Google to permit third-party app stores on Android devices, a decision Google has stated it intends to appeal.

Conclusion: A Heated Battle for Cloud Market Control

The allegations of covert influence tactics represent a notable escalation in the long-standing competition between Microsoft and Google. As both tech giants vie for dominance in the burgeoning cloud services market, the involvement of regulatory authorities and antitrust investigations may have far-reaching impacts on the industry.

Microsoft’s public statement against Google could signal a more aggressive approach to corporate rivalry, while Google's continued advocacy for regulatory scrutiny on Microsoft’s practices highlights the intense competition shaping today’s technology sector.

Ultimately, the cloud market’s future may be heavily influenced by the regulatory decisions emerging from these battles, impacting customer choice, market innovation, and competitive balance within this high-stakes industry.

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