Last Wednesday, the French cloud computing services provider OVH (OVH.PA) announced a joint complaint against Microsoft with two other unknown European plaintiffs. A spokesperson of OVH declined to give the names, and they will be anonymous until late in the process. Still, they are probably members of the CISPE, the Cloud Infrastructure Services Providers organization in Europe.
The complaint was filed with the European Commission’s antitrust arm in the summer of 2021, alleging that Microsoft’s Azure Cloud is cheaper to use than its competitors due to how Microsoft licenses its Office products. The plaintiffs say the licensing scheme on top of Azure Cloud of products like Office 365 (I would also mention Windows, SQL Server, and others) are significantly cheaper than licensing the same products on top of other Cloud Providers -like OVH-. “Through abusing its dominant position, Microsoft undermines fair competition and limits consumer choice in the cloud computing services market,” OVH told WSJ.
It’s the third complaint against Microsoft in a lapse of 18 months. In 2020 Slack filed a similar complaint alleging that Microsoft wasn’t letting other services integrate with Teams. And last year, the German cloud storage company Nextcloud filed a complaint about the bundling of OneDrive and Windows.
The keyword is bundling. Microsoft loves to bundle multiple software licenses so that less attractive products like Teams or One Drive are offered with more captive software like Windows or Office suite. Or Cloud platforms like Azure. The Microsoft old trick plays repeatedly, but now in the Cloud wars: The Habit.
The Habit is part of the DNA of several B2B tech companies, but none has ever excelled so much doing it as Microsoft. The Habit has changed and evolved from the testosteronic approach of Bill Gates and Steve Balmer to the more subtle and elegant touch of Satya Nadella.
Gates knew that The Habit could destroy competitors and make Microsoft prevail in the Internet Wars, so he decided to play hard and chose to embed Microsoft Explorer right into the guts of Microsoft Windows. He knew that the friction of downloading and installing Netscape was unacceptable for most users. So he destroyed “The most innovate company in Silicon Valley” in the words of Larry Ellison, Oracle’s CEO at that time.
Balmer went on with The Habit using the jewel of the crown: Windows. Microsoft’s proposal to CIOs was clear and concise: Come to us, and you will not have to suffer the problems of licensing madness with multiple providers. And it worked until Linux became an alternative at the server-side, open-source initiatives became commonplace, and the Infrastructure as a Service became a real option not only for early adopters but all the industry.
When Nadella replaced Balmer, he had a lot of challenges in a company that was losing ground with its competitors and was becoming irrelevant from the brand awareness perspective. First, he had a brand with a poor reputation in the tech trenches but loved by managers: they liked how Microsoft’s approach to licensing could simplify things a lot. Second, he had to close the gap between Azure and AWS and widen it with Google Cloud.
In less than a decade, the brand sentiment of Microsoft has evolved from negative to neutral. It’s not the hated company it was with Gates and especially with Balmer. It does not have the halo of Apple, but haters are now focusing on other large tech companies. And Azure is relentlessly catching up with AWS. The chances of becoming the #1 Cloud Provider worldwide could happen in less than two years.
But what about The Habit? It’s still deep in the DNA of Microsoft. It was there, but nobody cared while Microsoft was losing ground. While AWS was the leader by far, nobody looked at Microsoft. But now it’s again like the giant dominant of the nineties. And Microsoft will use its weapons to destroy the competitors. A few years ago, the enemy of the European Cloud providers was Amazon Web Services. So focused on this enemy, they forgot about the “new” Microsoft and his Habit.
The European cloud providers have a severe problem with Microsoft because the media and the European citizens ignore their demands. Microsoft is not like Apple, Facebook, Google, or Amazon. The citizens do not feel Microsoft affects their daily lives and ignore it because that’s precisely the role that Microsoft wants to play: neutral.
In my opinion, the European Cloud providers can’t compete with the Americans without the regulators and bureaucrats backing them. The pace of innovators and regulators is so different that we will never be able to catch up with solid regulation. But are politicians willing to do it? I’m not so sure because Microsoft is transparent. The citizens are not complaining against Microsoft maneuvers; they are ignoring them. And hence, the incentives of our politicians are null.
The Music Snippet
We Europeans sometimes feel so numb