Google attempted to thwart a settlement with Microsoft over antitrust laws governing software licensing in the European Union by offering the group of cloud providers behind the EU complaint an alternative deal worth $500 million, Bloomberg reported.
According to Bloomberg, Google's offer to Cloud Infrastructure Services Providers in Europe (CISPE) required the group to maintain its EU antitrust complaint. It came “just days” before CISPE reached a settlement with Microsoft, and it was apparently not compelling enough to deter CISPE from reaching a deal with the software giant, which TechCrunch reported forced CISPE to accept several compromises.
Bloomberg learned of Google's counteroffer after reviewing confidential documents and speaking to “people familiar with the matter.” Google apparently tried to influence CISPE with a package worth nearly $500 million for software licenses over five years and about $15 million in cash.
But CISPE didn't bite and announced last week that an agreement had been reached with Microsoft, apparently frustrating Google.
CISPE first filed a complaint in 2022, alleging that Microsoft was “irreparably damaging the European cloud ecosystem and depriving European customers of choice in their cloud deployments” by raising the cost of running Microsoft software on competing cloud services. In February, CISPE said that “any remedies and solutions must be industry-wide and accessible to all cloud customers in Europe.” It also promised that “all agreements will be made public.”
But the settlement reached last week excluded major rivals including Amazon, which is a CISPE member, and Google, which is not. And despite CISPE’s promise, the terms of the deal were not made public, apart from a CISPE blog post that broadly outlined key features that it said addressed the group’s concerns about Microsoft’s alleged anticompetitive behavior.
What is clear is that CISPE agreed to drop its complaint by entering into the deal, but no one knows exactly how much Microsoft paid in a “lump sum” to cover CISPE’s legal fees for three years, TechCrunch noted. However, “two people with direct knowledge of the matter” told Reuters that Microsoft offered around $22 million.
Google is trying to catch up to Microsoft and Amazon in the cloud market and has been gaining ground recently. Last year, Google’s cloud operation broke even for the first time and the company posted a surprise profit of $900 million in the first quarter of 2024, beating analysts’ forecasts by more than $200 million, Bloomberg reported. For Google, the global cloud market has emerged as a key growth area, Bloomberg noted, as potential growth opportunities in search advertising shrink. The apparent mounting regulatory pressure on Microsoft as it acquires part of its EU business should be one of Google’s next big moves.
A CISPE spokesperson, Ben Maynard, told Ars that its “members were presented with alternative options to accept the Microsoft deal,” without disclosing the terms of the other options. “However, members voted by a significant majority to accept the Microsoft offer, which they believed offered the best opportunity for the European cloud sector,” Maynard told Ars.
Neither Microsoft nor Google immediately commented on the reported counterbid. A Google spokesperson told Bloomberg that Google “has long supported the principles of fair software licensing and has had discussions about joining CISPE to combat anticompetitive licensing practices.” A person familiar with the matter told Ars that Google did not necessarily condition its counterbid on the EU complaint being dropped, but had long considered joining CISPE and would only do so if CISPE upheld its mission of defending fair licensing agreements. Microsoft reiterated an earlier statement from its president, Brad Smith, in which he confirmed that Microsoft was “pleased” to have resolved CISPE's antitrust complaint.
For CISPE, the solution may not have been perfect, but it “enables European cloud providers to offer Microsoft applications and services on their local cloud infrastructures, meeting the demand for sovereign cloud solutions.” In 2022, CISPE Secretary General Francisco Mingorance told Ars that while CISPE had made it clear it wanted to force Microsoft to make changes so that all of its cloud rivals could compete, “a key reason behind filing the complaint was to support” two smaller cloud service providers, Aruba and OVH.
