Microsoft is being sued in Britain on a claim that thousands of companies that utilise cloud computing services like Google, Alibaba, and Amazon may be paying more for Windows Server software licences.
TakeAway Points:
- Microsoft 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.
- Computer chip equipment maker ASML said it does not expect new U.S. restrictions on semiconductor exports to China, announced on Monday, to affect its most recent financial guidance.
Microsoft faces UK lawsuit over cloud computing licences
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 practices, for example for its Windows Server and Microsoft 365 products, are part of its inquiry.
It is due to update on its investigation imminently.
New Licence fees
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.
ASML won’t change guidance after new US crackdown on China chip exports
The company ASML, which makes computer chip equipment, stated that it does not anticipate that the new U.S. limitations on semiconductor shipments to China, which were announced on Monday, will have an impact on its most recent financial guidance.
Separately, the Dutch government said it shares U.S. security concerns on the export of advanced semiconductor-making tools and is studying the latest U.S. rules.
In a statement, ASML repeated Nov. 14 guidance that it sees group sales at 30-35 billion euros ($31.5-36.7 billion) in 2025, with approximately 20% of sales in China – down from around 50% this year.
It said the latest U.S. restrictions would affect ASML’s export of deep ultra violet lithography systems to some chip-making plants in China if enforced by the Dutch government.
The new U.S. rules are Washington’s third crackdown in three years on China’s semiconductor industry, tightening regulations on equipment makers and curbing exports to 140 Chinese companies, including additional subsidiaries of China’s biggest bespoke chipmaker, SMIC “The Netherlands shares American concerns over uncontrolled export of advanced semiconductor equipment,” the Dutch foreign ministry said in a statement.
“Every country makes its own assessment and takes measures on the basis of its own analysis of threats to national security.”
The latest U.S. rules include tighter restrictions on software and metrology, or measuring, equipment that are relevant for ASML.
“Long term, our scenarios for demand in the semiconductor industry are not expected to be impacted by the new regulations, as our scenarios are based on the global demand,” ASML said in a statement.
ASML shares closed 0.9% higher at 664.10 euros in Amsterdam.
Restrictions on computational lithography
The new U.S. rules include restrictions on ‘computational lithography’ – software used to optimize the effectiveness of lithography machines such as those made by ASML and Japanese competitors Nikon and Canon, which use beams of light to help create circuitry.
ASML, the biggest lithography machine maker, says on its website that its computational lithography is also “industry leading” and helps improve chip yield and quality.
