Historically, Google and Microsoft are not the best at getting along with each other. Both companies have had feuds in the past, with some “aggressive” moves against each other’s products. Now, a new pitched battle between two of the biggest players in the tech industry seems about to begin. Microsoft claims that Google is developing “shadow campaigns” to undermine its cloud business.
Rima Alaily, Microsoft’s deputy general counsel, launched the accusation through a blog post. Microsoft believes that Google is financing pressure groups or lobbies to sell a negative image of its cloud services and business model to the authorities. Google could be forming the so-called “astroturf” group with that goal, including tech companies and communication agencies.
Google could be financing lobbying against Microsoft’s cloud business
“Google has gone through great lengths to obfuscate its involvement, funding, and control, most notably by recruiting a handful of European cloud providers, to serve as the public face of the new organization. When the group launches, Google, we understand, will likely present itself as a backseat member rather than its leader,” Alaily says.
The Redmond giant reportedly learned of the Google-funded lobbying from a company invited to join the group. “One of the companies approached, who ultimately declined, told us that the organization will be directed and largely funded by Google for the purpose of attacking Microsoft’s cloud computing business in the European Union and the United Kingdom,” reads the blog post.
Windows Server licenses, the source of the problem
The whole situation stems from Google’s complaints about Microsoft’s licensing fees for Windows Server. The Mountain View giant considers the fees for using Windows Server-based developments on cloud providers other than Microsoft to be an anti-competitive measure. Such fees do not apply when using the company’s Azure servers. Amit Zavery, vice president of Google Cloud, claims that the fees are up to 400%.
In September, Google sued Microsoft before EU antitrust regulators over the matter. The company’s goal may be to convince the authorities that Microsoft’s practices are anti-competitive. Google claims that the abusive fees aim to compel the use of Azure servers rather than permitting the participation of alternatives.
Microsoft, for its part, asserts that lobbies funded by Google attempt to influence ongoing legal proceedings. The North American company cites the case of Cloud Infrastructure Services Providers in Europe (CISPE) as an example. Microsoft reached a settlement with CISPE in 2022 over licensing issues. However, they claim that Google offered CISPE up to $500 million to reject the settlement.
Microsoft believes it is doing the right thing
Microsoft is convinced that it is within its rights to charge such fees. “Fundamentally, Google’s argument is that it should not have to pay Microsoft when it builds and offers cloud services using our intellectual property – namely Windows Server – if customers have otherwise purchased the same software for a very different use, i.e., on their own server,” the blog post says.
The latest major legal showdown between Google and Microsoft ended in 2021. However, all signs point to friction between the two being about to escalate. In previous conflicts, Google has been tough on Microsoft developments, such as Windows Phone. The company refused to develop Windows Phone native apps for services as popular as YouTube, for instance.