Microsoft destroys rival cloud firms' profit margins, Amazon-backed group alleges

Microsoft was accused Friday of abusing the dominance of its Azure cloud computing unit to squeeze a — and, in some cases, evaporate — the profit margins of rival cloud platforms in Europe.

The claim came in a complaint from CISPE, a trade body for "infrastructure as a service" cloud firms in Europe. It also comes as the Redmond, Washington-based technology giant is facing intense scrutiny over its cloud computing and software licensing practices in the European Union, as well as the U.K. and U.S.

The allegations stem from tweaks Microsoft made to its licensing terms in 2019. Under those rules, Microsoft required firms to purchase a Software Assurance license and "mobility rights" if they wanted to deploy their Microsoft software on hosted cloud services offered by rival providers.

Customers also couldn't rely on perpetual licenses they had already purchased to run Microsoft applications on so-called "listed providers" like Alibaba, Amazon, Google, and Microsoft itself. They'd have to buy new licenses, instead. Meanwhile, some software, including Office 365 Windows Apps, was forbidden from running on rival clouds.

The terms are the source of intense anger from competing cloud firms in Europe, like France's OVHCloud and Italy's Aruba, as well as Big Tech competitor Amazon. It also formed the basis of an investigation from the European Commission seeking to determine whether Microsoft's cloud practices are anti-competitive.

Microsoft declined to comment when contacted by CNBC. In 2022, Microsoft President Brad Smith wrote a blogpost saying it was revising its licensing deals and making it easier for cloud providers to compete.

In its complaint Friday, CISPE — which is heavily funded by Amazon — showed an example in its research