Microsoft Must Face $2.8 Billion UK Lawsuit Over Cloud Computing Licences

Microsoft Faces $2.8 Billion UK Lawsuit Over Cloud Computing Licences

Microsoft's Legal Battle Over Cloud Computing Licences

Overview of the Lawsuit

LONDON, April 21 (Reuters) - Microsoft must face a mass lawsuit alleging it overcharged thousands of British businesses to use Windows Server software on cloud computing services provided by Amazon, Google and Alibaba, a London tribunal ruled on Tuesday.

Competition lawyer Maria Luisa Stasi is bringing the case on behalf of nearly 60,000 businesses that run Windows Server on rival cloud platforms. Her lawyers have previously said the claim was worth up to 2.1 billion pounds ($2.8 billion).

Allegations of Overcharging

They argued at a hearing last year that the businesses were overcharged because Microsoft charges higher wholesale prices for Windows Server than for users of Azure, costs that are passed on to customers and make Azure cheaper than Amazon's AWS or Google Cloud.

Microsoft said Stasi's case failed to set out a workable method for calculating any alleged losses and should be thrown out.

Tribunal's Decision and Reactions

But London's Competition Appeal Tribunal certified the case to proceed towards trial, an early step in the proceedings. Microsoft did not immediately respond to a request for comment.

Stasi said in a statement that the ruling was "an important moment for the thousands of organisations impacted by Microsoft's conduct".

Microsoft's Defense and Regulatory Scrutiny

Microsoft argued at last year's hearing that its vertically integrated business model - using Windows Server as an input for Azure while also licensing it to rivals - can benefit competition.

Regulators in Britain, Europe and the U.S. are separately examining the practices of Microsoft and other firms in cloud computing.

Regulatory Investigations

Last July, an inquiry group from Britain's Competition and Markets Authority said Microsoft's licensing practices reduced competition for cloud services "by materially disadvantaging AWS and Google".

Microsoft said at the time the report had ignored that "the cloud market has never been so dynamic and competitive".

Last month, the CMA said it would again investigate Microsoft's software licensing practices in the cloud market.

Additional Information

($1 = 0.7402 pounds)

(Reporting by Sam Tobin. Editing by Mark Potter)