Microsoft faces UK lawsuit over cloud computing licences

LONDON, Dec 3 (Reuters) - Microsoft MSFT.O faces legal action in Britain over a claim that thousands of businesses using cloud computing services provided by Amazon, Google and Alibaba could be paying higher licence fees to use Windows Server software.

Competition lawyer Maria Luisa Stasi filed a case at the Competition Appeal Tribunal on Tuesday, claiming that British businesses and organisations could collectively be owed more than 1 billion pounds ($1.27 billion) in compensation.

"Put simply, Microsoft is punishing UK businesses and organisations for using Google, Amazon and Alibaba for cloud computing by forcing them to pay more money for Windows Server," she said.

"By doing so, Microsoft is trying to force customers into using its cloud computing service Azure and restricting competition in the sector."

Separately, Britain's competition regulator is investigating cloud computing, a market dominated by Amazon's AWS, Microsoft's Azure and, to a lesser extent, Google Cloud Platform.

Microsoft's licensing practises, for example for its Windows Server and Microsoft 365 products, are part of its inquiry.

It is due to update on its investigation imminently.

Microsoft in 2020 introduced new licence fees for running its software on major cloud providers.

The claim alleges it then used the fees to induce customers to use its Azure platform.

Data from the Competition and Markets Authority published in May showed Microsoft was winning customers at a significantly higher rate than other cloud providers since it made the licensing change.

The United States Federal Trade Commission last week opened a broad antitrust investigation into Microsoft, including its cloud computing business, according to a source familiar with the matter.

The FTC is examining allegations the software giant was potentially abusing its market power in productivity software by imposing punitive licensing terms to prevent customers from moving from Azure to competitive platforms, sources said last month.

($1 = 0.7891 pounds)

(Reporting by Paul Sandle; editing by William James)

((paul.sandle@thomsonreuters.com; +44 20 7542 6843; Reuters Messaging: paul.sandle.thomsonreuters.com@reuters.net))