A London court ruled on Tuesday that Microsoft must defend against a class action lawsuit alleging the company overcharged thousands of UK businesses for using Windows Server software on competing cloud platforms such as Amazon Web Services, Google Cloud, and Alibaba Cloud.
Competition law specialist Maria Luisa Stasi is representing nearly 60,000 companies that operate Windows Server on rival cloud services. Her legal team has previously indicated that the potential claim could reach up to £2.1 billion (approximately $2.8 billion).
During hearings last year, the claimants argued that these businesses were overcharged because Microsoft imposed higher wholesale licensing fees for Windows Server on other cloud platforms compared to what it charges its own Azure cloud service users. This cost differential, they contend, is ultimately passed on to customers, giving Azure a pricing advantage over competitors like Amazon AWS and Google Cloud.
Microsoft argued that Stasi's legal team failed to propose a viable methodology for calculating losses and requested that the case be dismissed.
However, the UK Competition Appeal Tribunal has allowed the case to proceed to trial, marking an early stage in the litigation process. Microsoft did not immediately respond to requests for comment.
In a statement, Stasi described the ruling as "a significant moment for the thousands of organizations affected by Microsoft's conduct."
During last year's hearings, Microsoft defended its vertically integrated business model—using Windows Server for Azure while also licensing it to competitors—arguing that it actually benefits market competition.
Regulatory bodies in the UK, European Union, and United States are separately investigating cloud-related practices of companies including Microsoft.
In July of last year, an investigation panel from the UK's Competition and Markets Authority (CMA) noted that Microsoft's licensing practices "put AWS and Google at a significant disadvantage," undermining competition in the cloud services market.
At the time, Microsoft responded by stating that the report ignored the fact that "the cloud market has never been more dynamic or competitive."
Last month, the CMA announced it would launch a new investigation into Microsoft's software licensing practices in the cloud market.
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