A complaint alleging anti-competitive behaviour by Microsoft reflects familiar anxieties about the dominance of US tech firms and Europe’s (in)ability to compete in digital markets
The Spanish Association of Startups accused Microsoft of engaging in illegal, anti-competitive conduct in the cloud market
On 7 May 2024, the Asociación Española de Startups (Spanish Association of Startups) filed a complaint with the country’s competition authority and sectoral regulator, the CNMC, alleging that Microsoft is engaging in anti-competitive and illegal conduct in the cloud market. The Association represents over 700 startups in Spain and is the organisation behind ‘Nubes’, an international campaign calling for more competition in cloud markets, which has been joined by trade associations from Portugal, Peru, Colombia, Chile, Argentina and Mexico. The complaint urges the CNMC to investigate Microsoft’s practices in the Spanish market and cites a similar complaint against Microsoft filed with the EC in 2022 by the broader Cloud Infrastructure Service Providers in Europe (CISPE). While the Association did not suggest any specific remedies, it recommended that “urgent measures be taken” to address Microsoft’s conduct in the meantime.
The complaint discusses the negative impact of cloud market consolidation on the broader startup ecosystem
Regarding Microsoft’s conduct in the cloud market, the Association alleges that the tech giant limits data portability and creates restrictions in software licensing in order to hinder competition. As a result of less competition, startup firms do not have choice or flexibility in the cloud market, which the Association suggests limits innovation, resilience and growth in the startup ecosystem. Though the focus of the complaint is the cloud market, Microsoft’s market power in downstream markets, including operating systems and software, also provides important context to the Association’s concerns. The complaint claims that Microsoft is leveraging its Windows operating system and Microsoft Office software to influence more users to employ its Azure cloud services, gaining it market share. Unlike the CISPE complaint, the Association highlights its role in representing the businesses that are customers of cloud providers and discusses the broader negative impacts of market consolidation on the whole of the economy as opposed to the issues raised by competitors of Microsoft in the cloud market.
Spain is one of a number of European countries investigating the cloud market, reflecting a common anxiety about US dominance
In November 2023, the CNMC launched a market study into cloud services, joining a number of global peers in investigating the concentrated nature of the market. Though the regulator did not name any tech firms in announcing the study, it did cite similar concerns to those described by the Association of Startups related to the difficulty in switching cloud providers. Spain was the fourth European country to launch a study of the cloud market, after France, the Netherlands and the UK. The dominance of American tech firms in the cloud market, including Microsoft, Google and Amazon, has also spilled over into other elements of the EU’s digital policymaking as of late. The debate on the EU Cloud Certification Scheme (EUCS) has shifted to include questions on cloud sovereignty, although critics of mandating cloud sovereignty have branded the proposal as protectionist. Most broadly, both the market studies from these regulators and the complaints lodged by organisations such as the Association for Startups reflect an ongoing reckoning with the global power of American and, to a lesser extent, Chinese big tech companies. The debate on cloud markets is underlined by longer term anxieties around Europe’s ability – perhaps inability – to compete in a range of digital markets.
