Here’s the five biggest things to know about Google’s comment against Microsoft, alleging anti-competitive practices that makes it difficult for Microsoft customers to use anything outside of Azure infrastructure. 
Google is alleging Microsoft has created anti-competitive practices via its bundling and software licensing agreements to make it difficult for clients to use anything outside of its Azure infrastructure solutions.
In its letter Wednesday to the Federal Trade Commission (FTC), Google said Microsoft’s complex agreements seek to “lock-in clients to their ecosystems,” with the software giant “limiting choice, increasing costs for customers” and disrupting the digital ecosystems throughout the world, according to CNBC. Microsoft and Google did not respond for comment on the matter by press time. CRN has sent a request to the FTC but has not heard back as of press time.
[Related: Top 10 Biggest Google Cloud News Stories Of 2023 (So Far)]
Microsoft told CRN in an email that it had “made changes to our cloud licensing terms to address licensing concerns and provide more opportunity for cloud providers.”
“Worldwide, more than 100 cloud providers have already taken advantage of these changes. And as the latest independent data shows, competition between cloud hyperscalers remains healthy. In the last quarter of 2022 Microsoft and Google made small gains on AWS, which continues to remain the market leader by a significant margin,” said a Microsoft spokesperson.
Google Vs Microsoft
Google Cloud, the cloud computing arm for parent company Google, and Microsoft have been battling for cloud market share across the globe for years. Both Google Cloud and Microsoft offer cloud infrastructure and critical cloud services via their data centers to thousands of businesses of all shapes and sizes.
The two technology giants compete on other various fronts including collaboration and productivity that pits Microsoft Office 365 against Google Workspace. The two companies are going head-to-head in the emerging market of generative artificial intelligence (AI) on both the consumer and enterprise front as well as providing similar cybersecurity offerings. Additionally, Google and Microsoft compete for channel partner mindshare regarding MSPs, system integrators, resellers and cloud consultants who sell their products and services to customers around the world.
Google Cloud owns 10 percent of global cloud market share, followed by Microsoft at 23 percent share, then Amazon Web Services at 32 percent share as of the first quarter 2023, according to data from Synergy Research Group.
CRN breaks down the five things Google and Microsoft partners, investors and customers need to know about Google’s allegations against Microsoft’s licensing practices. 
On June 21, Google filed a comment with the U.S. Federal Trade Commission (FTC) saying Microsoft uses software licensing restrictions to keep customers locked into the company’s public cloud Azure infrastructure and services.
Google said Microsoft uses its Windows Server and Microsoft Office products to keep clients on Azure and make it difficult for people to use Azure cloud only. Google is accusing Microsoft of creating licensing terms in its Office 365 software suite to lock customers into separate contracts with its Azure cloud server business. Microsoft’s goal, Google said, is to gain more control and market share in the cloud computing market by making it difficult for customers to use anything but Azure infrastructure.
Google said Microsoft’s licensing restrictions are a “complex web” that prevents businesses from diversifying their enterprise software vendors, according to CNBC. “[Microsoft is] not only forcing customers toward a monolithic cloud model but also limiting choice, increasing costs for customers, and disrupting growing and thriving digital ecosystems in the U.S. and around the world,” says Google.
Google’s comment to the FTC was sent in a response to an FTC request for comment on potential anti-competitive strategies in the massive cloud computing industry. 
In the filing with the FTC, Google reportedly said Microsoft’s control with its licenses and customer lock-in tactics presents a national security risk.
Specifically, Google highlighted cyber-attacks that involved Microsoft products such as the massive SolarWinds breach three years ago.
In 2020, suspected Russian government hackers gained access to U.S. government agencies, critical infrastructure entities and private sector organizations via a supply chain attack against SolarWinds’ Orion network monitoring platform that sent shockwaves throughout the IT world. The attack allowed hackers to compromise Microsoft’s own products to further the attacks on other victims, including Microsoft Office 365.
Microsoft has not responded to request for comment on this matter. 
Last year, a group of overseas cloud providers filed an antitrust complaint regarding Microsoft’s software licenses such as charging third-party cloud providers extra to run its software, as Google publicly voiced its concerns as well.
A trade group of 24 cloud computing providers in Europe, dubbed the Cloud Infrastructure Service Providers of Europe, argued that Microsoft leverages its dominant position in productivity software in a manner that limits choice and raises prices as European clients look to shift to the cloud. According to the group, the European cloud ecosystem was being irrevocably harmed by Microsoft’s new contractual conditions that went into effect on October 2022.
In October, in an effort to appease these antitrust concerns in Europe, Microsoft launched global changes to its partner program with the goal of making outsourced infrastructure hosting easier – changes still criticized by Google. The changes included a new partner program for “hosters,” eliminating the need for another license to virtualize Windows 10 and 11 on customer servers and outsourcers’ servers, removing the ability to outsource certain licenses on major cloud vendors’ data centers and new Windows Server virtual core licensing. Microsoft also promised one- and three-year subscription options for Windows Server, Remote Desktop Services (RDS) and SQL Server for partners in the Cloud Solution Provider program.
Marcus Jadotte, vice president of government affairs and policy at Google Cloud, said at the time that Microsoft’s changes continue to lock customers into its cloud. “The promise of the cloud is flexible, elastic computing without contractual lock-ins,” Jadotte tweeted. “Customers should be able to move freely across platforms and choose the technology that works best for them, rather than what works best for Microsoft.”
Jadotte continued: “At Google Cloud, we believe that openness matters, and we continue to gain customers’ trust by promoting the security, cost, and benefits of using multiple cloud providers. We urge all cloud providers to avoid locking in their customers and compete on the merits of their technologies.” 
Google’s comment to the FTC stems from the a request by the Coalition for Fair Software Licensing, a lobbying group supported by IT firms, for the FTC pay more attention to what Microsoft is doing with its licenses.
The FTC in March put out a public request for more information on the business practices of cloud computing providers including issues related to the market power of these companies, impact on competition, and potential security risks. Complaints are just one factor the FTC gathers before opening a formal investigation that must be completed before any action can be brought forth.
“Microsoft has a proven history of leveraging its dominance in one market to gain a foothold and extinguish competition in another. Today the software giant is using that same playbook to exploit customers’ dependence on its desktop operating system, server, and productivity software to force customers to use Azure and other products in the Microsoft ecosystem,” Coalition Executive Director Ryan Triplette said in a statement.
“We are asking the FTC to open an investigation into Microsoft’s anticompetitive restrictive software licensing practices,” Triplette said. “Any inquiry into cloud computing in the U.S. would be incomplete without a closer look at Microsoft’s anticompetitive software licensing and its impacts on customers.” 
It is key to note that Microsoft has been hit by several antitrust complains in 2023, including one that is blocking its blockbuster takeover of gaming superstar Activision Blizzard by the Competition and Markets Authority in Europe.
The FTC has sued to block the merger between Microsoft, owner of the popular Xbox gaming system, and Activision Blizzard. The commission claimed the move would allow Microsoft’s Xbox consoles and cloud-gaming platform exclusive access to Activision’s long list of video games, this blocking competition.
If Microsoft eventually finalizes the Activision Blizzard purchase, it would be one of the largest acquisitions in gaming history. Microsoft has appealed the ruling.
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