ET Explainer: Why are Google and Microsoft at loggerheads in the UK?

Tech firms Google and Microsoft are at loggerheads again, this time with Google pushing for antitrust action against Microsoft in the United Kingdom. What are the latest developments in this rivalry? Here is an explainer.

What does Google say?
In a letter to the UK’s antitrust regulator, Competition and Markets Authority (CMA), Google has called for action against Microsoft on the grounds that its business practices in the cloud services segment puts rivals at an unfair disadvantage, Reuters reported.

“With Microsoft’s licensing restrictions in particular, UK customers are left with no economically reasonable alternative but to use Azure as their cloud services provider, even if they prefer the prices, quality, security, innovations, and features of rivals,” Google said in the letter.


It said this harmed customers and the competition environment in the UK’s cloud computing market.

The search firm urged the CMA to force Microsoft to enable interoperability with other cloud services for customers using Azure. It also recommended that Microsoft be banned from withholding security updates from users who switch to other cloud services.

What’s the background?
The development comes after the UK’s communications regulatory body Ofcom in October referred the cloud computing market to the CMA for investigation.

“Our market study has identified features that make it more difficult for UK businesses to switch and use multiple cloud suppliers. We are particularly concerned about the position of the market leaders Amazon and Microsoft,” Ofcom had said in a statement.

The study found that Amazon Web Services and Microsoft together had a market share of 70-80% in the country in 2022, with Google as their closest competitor with 5-10%.

Google has objected to Microsoft’s update of terms such that costs would be higher if customers wanted to use Microsoft software in the cloud via Google or AWS rather than Azure.

What’s Microsoft’s response?
Microsoft has said it worked with independent cloud providers to allay concerns and promote competition by updating its licensing rules last year, which benefited around 100 players globally.

"As the latest independent data shows, competition between cloud hyperscalers remains healthy. In the second quarter of 2023 Microsoft and Google made equally small gains on AWS, which continues to remain the global market leader by a significant margin,” a Microsoft spokesperson told Reuters.

Rivalry across the pond…
The two companies have locked horns in their home market in the US as well, most recently in the landmark antitrust case against Google where the contention is that Google maintains dominance in the online search engine segment by paying to be default search engine on smartphones and web browsers such as Safari and Firefox.

In October, Microsoft CEO Satya Nadella testified in a US federal court that Google’s multibillion-dollar deals to be the default search engine had put Microsoft at a disadvantage, the New York Times reported.

He jibed that the internet was actually the ‘Google web’.

The two companies are also at loggerheads in the global artificial intelligence race, where Microsoft backs ChatGPT-maker OpenAI while Google has developed its own generative AI platform Bard.