British digital rights advocacy group launches $1.3B lawsuit against Microsoft

Dec. 3 (UPI) -- Microsoft is facing a $1.3 billion class action lawsuit in Britain alleging it overcharged clients of its Windows Server software used in cloud computing.

The case is being brought in the Competition Appeal Tribunal, a specialist judicial body, by regulation expert Dr. Maria Luisa Stasi who is claiming compensation for British businesses who pay to license the software.

She alleges business users who use the cloud platforms of competitors such as Amazon, Google and Alibaba, rather than Microsoft's Azure product, are unfairly charged more and are due damages of almost $1.3 billion for the U.S. tech giant's anti-competitive practices.

Under the action brought by Stasi, head of law and policy for digital rights advocacy group Article19, eligible Windows Server customers will be automatically "opted in" and get a share of any damages won unless they ask to be excluded.

According to the suit, companies running Windows Server on Azure get a cheaper deal meaning those who don't are being overcharged to use cloud solutions from other providers -- with Microsoft leveraging its market-leading position in the sector to push customers to switch to Azure with its two-tier pricing structure.

"Put simply, Microsoft is punishing U.K. businesses and organizations for using Google, Amazon and Alibaba for cloud computing by forcing them to pay more money for Windows Server," Stasi told CNBC.

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

She said the goal of the suit was to "challenge Microsoft's anti-competitive behavior, push them to reveal exactly how much businesses in the U.K. have been illegally penalized, and return the money to organizations that have been unfairly overcharged."

Microsoft did not immediately comment on the suit.

The case comes as Britain's antitrust regulator, the Competition and Markets Authority, is poised to announce "behavioral" fixes to deal with anti-competitive practices in Britain's $9.1 cloud computing market, likely aimed at Microsoft and Amazon which dominate the sector.

The CMA launched a two-year antitrust investigation into cloud computing in October 2023 following a complaint from the communications regulator, Ofcom, that Amazon and Microsoft were squeezing out competition.

Ofcom conducted a year-long study that found numerous competition red flags including high fees for transferring data out, committed spend discounts and technical restrictions that made it difficult for business customers to switch providers or use multiple providers.

Of particular concern, Telecoms regulators said, was the 70%-80% market share held by Amazon and Microsoft prompting them to designate the two tech giants as "hyperscalers," because their services are used by the vast majority of cloud customers in some form.