Why Microsoft is facing a $2.8B lawsuit in the UK
What's the story
A London tribunal has given the green light to a mass lawsuit against Microsoft, The Guardian reported. The case involves nearly 60,000 UK businesses who claim they were overcharged for using Windows Server software on Amazon, Google, and Alibaba's cloud services. The lawsuit could be worth as much as $2.8 billion and will now go to trial after being certified by London's Competition Appeal Tribunal.
Legal representation
Microsoft charged higher wholesale prices for Windows Server
The lawsuit is being represented by competition lawyer Maria Luisa Stasi. She said that the businesses were overcharged because Microsoft charges higher wholesale prices for the Windows Server than it does for Azure users. This pricing strategy, according to her, makes the Azure cheaper than Amazon's AWS or Google Cloud.
Legal strategy
Microsoft plans to appeal against the decision
In response to the lawsuit, Microsoft has said that Stasi's case doesn't provide a feasible way to calculate any alleged losses and should be dismissed. A company spokesperson also said they plan to appeal against the's decision. "We also dispute the underlying allegations by the class representative (Stasi), and today's decision makes no final determination on those claims," the spokesperson said.
Impact assessment
Stasi welcomes tribunal's decision
Stasi has welcomed the tribunal's decision, calling it "an important moment for the thousands of organizations impacted by Microsoft's conduct." She represents businesses running Windows Server on rival cloud platforms. The case will now move toward trial, marking an early step in proceedings against Microsoft.
Market dynamics
Microsoft defends its business model
Microsoft has defended its vertically integrated business model, which uses Windows Server as an input for Azure while also licensing it to rivals. The company argues this can benefit competition. However, regulators in the UK, Europe and the US are separately investigating Microsoft as well as other firms in cloud computing. Last July, a group from Britain's Competition and Markets Authority (CMA) said Microsoft's licensing practices hurt competition for cloud services "by materially disadvantaging AWS and Google."