EU DMA Probes Cloud Gatekeepers as Google Withdraws Microsoft Complaint

Google’s decision to formally withdraw the antitrust complaint it lodged against Microsoft last year is a tactical retreat that hands the baton to Brussels — but it does not close the dispute over how Microsoft prices and licenses Windows Server, SQL Server and related workloads for use on rival cloud platforms. The move follows a major escalation by the European Commission, which in mid‑November opened a trio of market investigations under the EU’s Digital Markets Act (DMA) that will scrutinise whether Microsoft Azure and Amazon Web Services behave as “important gateways” in the cloud sector and whether existing DMA rules are fit for purpose in this fast‑evolving market.

Background / Overview​

The fight over cloud licensing in Europe has been months in the making, with three distinct threads converging: industry complaints from European cloud providers and trade bodies (notably CISPE), a formal complaint filed by Google Cloud, and a series of regulatory reviews by national and EU authorities. Google’s original complaint, filed publicly in September 2024, accused Microsoft of using contractual licensing and pricing practices to make it disproportionately costly — or technically constrained — for customers to run Microsoft workloads on competitor clouds. Google framed the issue as one of vendor lock‑in that harms customer choice and stifles competition. Microsoft has repeatedly denied those broader allegations, pointing out that it has negotiated commercial agreements with some European cloud providers and that it believes the cloud market is competitive. At the same time, Microsoft and CISPE reached a settlement in mid‑2024 to address a set of complaints from European cloud providers — a settlement reportedly worth around €20–22 million and involving commitments such as an enhanced Azure Stack HCI product and adjusted commercial terms for some CISPE members. Critics argued the CISPE deal left important questions unresolved, especially since the agreement did not include hyperscalers like Google and AWS. The European Commission’s decision to launch DMA‑based market investigations on 18 November 2025 is the single most consequential regulatory development to date: the probes examine whether AWS and Azure should be designated as DMA “gatekeepers” for cloud computing and whether the DMA’s current obligations can effectively address issues such as interoperability, conditioned access to data, tying/bundling and imbalanced contractual terms. The Commission said it will aim to complete the gatekeeper assessments within 12 months, with a separate market review to report within 18 months.

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What Google actually did — and why it matters​

Google “formally withdrew” its EU antitrust complaint against Microsoft after the Commission decided to open the broader DMA market investigations. The company explained the withdrawal as a pragmatic step to allow Brussels’ new regulatory process to proceed without duplicative or competing legal filings. In short: Google did not concede the underlying allegations; instead it redirected its enforcement energy toward the Commission’s DMA review mechanism. This is important for three reasons:

• It centralises the issue with the European Commission and its DMA toolkit rather than resolving it via a single Article 102 antitrust complaint.
• It increases the odds that remedies will be systemic (policy or rule changes) instead of case‑by‑case private settlements.
• It elevates the stakes and the potential remedies: gatekeeper designation under the DMA carries obligations like mandatory interoperability, limits on self‑preferencing and new transparency/contractual fairness rules — and it can be backed by heavy fines and mandatory compliance timetables.

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The DMA probe: scope, timetable and potential outcomes​

What the Commission will investigate​

The market investigations, launched under the DMA’s market review powers, have three target strands:

• A focused assessment of Microsoft Azure to determine whether it acts as an “important gateway” and thus should be designated as a DMA gatekeeper for cloud services.
• The same assessment for Amazon Web Services (AWS).
• A sector‑wide review to assess whether existing DMA obligations sufficiently address cloud‑specific practices such as limited interoperability, conditioned access to data, tying and bundling, and unfair contractual terms.

If the Commission finds that AWS or Azure qualify as gatekeepers for cloud infrastructure services, the companies could be added to the DMA’s list of core platform services and be subject to gatekeeper obligations tailored to the cloud context. The Commission said it aims to conclude the AWS and Azure investigations within 12 months; the broader market review is expected to deliver a final report within 18 months.

Practical remedies that could follow​

If the DMA probe finds systemic issues, Brussels could adopt any of the following measures:

• Designation of cloud services as gatekeepers, triggering obligations such as no self‑preferencing, open access to certain APIs and technical interfaces, and new transparency and contractual fairness rules.
• Regulatory acts expanding the DMA’s scope to cover cloud‑specific obligations (for example, portability rules for enterprise workloads or minimum contractual transparency standards).
• Behavioral remedies requiring changes to licensing models, mandatory interoperability specifications, or restrictions on conditional security updates and feature gating.
• Enforcement fines and mandatory compliance timelines for non‑compliant behaviour, with the possibility of significant financial penalties for breaches.

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The technical heart of the dispute: licensing mechanics and portability​

At the core of the controversy are a handful of licensing constructs and product behaviours that influence where enterprises run Microsoft workloads:

• Windows Server and SQL Server licensing differentials: Google and other critics point to licensing conditions that make running Windows Server or SQL Server instances on non‑Azure clouds more expensive — Google has alleged markups of up to 400% for certain configurations. That figure appears repeatedly in complainant filings and vendor statements, but it represents an allegation and an averaging of particular scenarios; it should be treated as a contested claim pending regulatory verification.
• Feature and security update gating: Complainants claim that Microsoft has limited or conditioned access to certain features, security updates or platform integrations unless customers use Azure or pay premium rates. Microsoft has disputed the breadth of these claims and points to bespoke commercial mechanisms it has agreed with some cloud partners.
• Identity and productivity tie‑ins: Integration between Entra ID (formerly Azure AD), Microsoft 365 and Teams is cited as a lock‑in vector: running some productivity or identity features outside of Azure can be made costly or operationally complex. Regulators will examine whether such integrations are objectively necessary or are commercially protective.

These mechanisms translate into material switching costs for enterprise IT departments. When the price of porting a workload to a competitor doubles or quadruples, or when critical patches or feature parity are subject to different commercial terms, technical portability ceases to be the only constraint — commercial and procurement dynamics drive the decision.

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Market context: why regulators care​

Cloud infrastructure is both massive and highly concentrated. Multiple recent market studies place the three hyperscalers — AWS, Microsoft Azure and Google Cloud — at roughly 60–65% of global IaaS/PaaS spending, with AWS leading and Microsoft and Google vying for share. Gartner reported that the IaaS market grew strongly in 2024 and that Amazon retained the No. 1 position, followed by Microsoft and Google, while Synergy Research and other independent analysts show similar concentration patterns. The Commission explicitly cited these concentration dynamics and the strategic role of cloud in AI development when launching the DMA probes. That concentration matters because cloud is the modern backbone for enterprise digital transformation and AI workloads. Small changes to licensing or contractual terms can tilt procurement decisions at very large customers, including EU governments and public authorities that award multi‑billion euro contracts. Regulators are therefore focused not only on hypothecated harm to competitors, but on downstream impacts to enterprise choice, privacy and strategic autonomy.

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What this means for enterprise customers​

For CIOs, procurement leads and cloud architects, the regulatory skirmish has immediate and practical implications:

• Review existing licensing exposure. Organisations that run Windows Server, SQL Server, Microsoft 365 Local, or other Microsoft workloads on third‑party clouds should audit current contracts and total cost of ownership to quantify licensing add‑ons and conditional terms. The economics that underpinned multi‑cloud bets two years ago may have shifted.
• Re‑examine hybrid and multi‑cloud strategies. If the DMA produces portability or interoperability obligations, migration costs and operational complexity may fall — but that will take time. In the interim, enterprises should maintain contingency plans and negotiation leverage.
• Prioritise contractual transparency. Seek clearer, auditable language on update policies, feature parity, and pricing indexation for running Microsoft workloads off‑Azure. Insist on exit‑cost visibility and explicit patch‑delivery commitments.

Enterprises should also factor regulatory timetables into procurement windows: the Commission’s 12‑ to 18‑month horizon means substantive changes — if any — will not be immediate. That gives procurement teams time to negotiate but also creates a period of regulatory uncertainty.

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Consequences for European cloud providers and the wider ecosystem​

European cloud providers have long argued that Microsoft’s licensing model disadvantaged them and distorted procurement. The CISPE complaint, subsequent settlement and ongoing scrutiny underscore that smaller regional providers are vulnerable to the combination of market scale and preferential licensing. If the DMA process results in new portability or interoperability mandates, regional providers could see improved access to enterprise workloads and an opportunity to compete on sovereignty, compliance and proximity. However, there are caveats:

• Technical interoperability is non‑trivial. Ensuring that complex stateful workloads move between hypervisors and cloud stacks without business continuity or security regressions requires engineering work and standards. Regulatory mandates can accelerate the process, but the engineering burden must be funded and implemented.
• Regulatory remedies that are too prescriptive risk producing brittle rules that fail to keep pace with product innovation, particularly in AI and GPU provisioning where rapid product cycles matter.
• The CISPE settlement and Microsoft’s subsequent product promises have shown that voluntary agreements can be reached — but they also illustrate the limits of bilateral deals that exclude major market players.

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Legal and policy analysis: strengths and open questions​

From a legal perspective, moving the focus from a traditional Article 102 complaint to DMA market investigations is a notable shift. Article 102 antitrust enforcement is case‑specific and tends to require proof of anticompetitive effects on the market. The DMA, by contrast, is a proactive regulatory architecture designed to prevent entrenched platform abuses via ex ante obligations for designated gatekeepers. That makes DMA remedies potentially swifter and more structural — but also more invasive. Key open questions include:

• Will the Commission designate cloud services as gatekeepers even when the DMA’s quantitative thresholds were not originally calibrated for infrastructure services? The Commission’s own statement signals a willingness to adapt the DMA’s reach based on market realities rather than strict thresholds.
• If gatekeeper obligations are imposed, how will the Commission define the technical boundaries of obligations such as interoperability, API access, and portability for enterprise software and identity primitives?
• Will national procurement frameworks (public‑sector tenders) be updated quickly enough to leverage any new portability or fairness rules, or will public buyers continue to drift toward incumbents for risk‑aversion reasons?

These questions are partly technical and partly political — and the answers will shape whether remedies produce competitive gains rather than regulatory arbitrage.

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Strategic implications for Microsoft, Google and AWS​

Each hyperscaler faces distinct commercial and reputational considerations:

• Microsoft must balance defending integration strategy and protecting IP and product coherence against the business risk of being forced into new interoperability obligations. The company has invested heavily in enterprise relationships and will likely emphasise technical necessity and customer benefits of integrated stacks.
• Google has signalled a long‑term strategic investment in European cloud growth and appears to prefer system‑wide regulatory fixes over narrow commercial deals. With its withdrawal, it appears to be banking on the DMA process to deliver broader structural remedies.
• AWS has historically pushed back against regulatory expansion that could create operational constraints, but will also defend its commercial interests when terms are skewed against third‑party hosts. How AWS participates in Brussels’ process — whether as a critic or an advocate for particular remedies — will matter.

All three companies will watch the EU’s process closely; the DMA’s outcome could set global precedents because many multinational customers use EU compliance and procurement outcomes as a benchmark.

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Risks and unintended consequences​

Regulatory action carries benefits, but also pitfalls:

• Over‑broad remedies could stifle innovation. Forcing interoperability in ways that break product semantics or remove incentives to invest in integration could harm end users over time.
• Regulatory arbitrage and fragmentation. Firms may respond by shifting product roadmaps and contractual practices to sidestep specific obligations, or by localising services in ways that fragment global offerings and raise costs.
• Implementation complexity and compliance costs. New obligations — especially those that require API exposure, data‑flow changes or identity portability — will demand significant product and compliance investment that could be passed through to customers.
• Time lag between rules and enforcement. The DMA process and subsequent technical standardisation cycles are slow; some customers will already have committed to long‑term cloud contracts before remedies take effect.

Regulators must therefore calibrate remedies so they are effective, technologically realistic and minimally disruptive.

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What to watch next — timelines and milestones​

1. European Commission evidence‑gathering and 12‑month gatekeeper assessment for AWS/Azure. The Commission has publicly committed to a roughly 12‑month window for the gatekeeper assessments.
2. DMA market review report (expected within 18 months), which could recommend updates to DMA obligations tailored to the cloud sector.
3. Responses from Microsoft, AWS and Google detailing technical evidence and proposed remedies — expect whitepapers, technical briefings and industry submissions to pile up in Brussels’ docket.
4. Procurement updates from large EU public buyers reacting to the evolving regulatory picture — these will indicate whether policy signals are already shifting purchasing behaviour.

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Final analysis: a strategic pivot, not an end​

Google’s withdrawal of its formal complaint against Microsoft is better understood as a strategic pivot than a capitulation. By stepping aside and letting Brussels’ DMA machinery run its course, Google and other market participants are effectively betting on structural regulatory fixes rather than incremental commercial settlements. That approach raises the prospect of systemic remedies that could reshape software portability, contractual fairness and interoperability across cloud platforms — but it also opens a period of regulatory uncertainty that will affect procurement, product roadmaps and competitive dynamics for at least the next 12–18 months. For enterprise buyers, the prudent response is immediate and practical: conduct a licensing and exit‑cost audit, demand contractual transparency from cloud and software vendors, and build procurement flexibility into new contracts. For European cloud providers, the DMA process is a genuine opening — but one that requires patient involvement, technical standardisation and credible commercial offerings if it is to translate into durable market share gains. For regulators, the challenge will be to design remedies that restore contestability without undermining the technical stability and innovation incentives that keep cloud services advancing.
Taken together, the withdrawal of Google’s complaint and the Commission’s DMA probes mark a turning point in cloud policy in Europe. The dispute is no longer a bilateral commercial fight; it has entered the realm of public policy, where the outcomes will matter for competition, sovereignty and the shape of cloud computing for years to come.

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Key takeaways

• Google has formally withdrawn its 2024 antitrust complaint against Microsoft, deferring to the European Commission’s new DMA cloud market investigations.
• The Commission’s market probes could lead to gatekeeper designations for AWS and Azure and to cloud‑specific DMA obligations within a 12–18 month horizon.
• The dispute centers on Microsoft licensing mechanics (Windows Server, SQL Server, identity/productivity integrations) that complainants say create commercial switching costs; some specific figures (e.g., 400% markups) are contested and should be treated as allegations pending regulatory verification.
• Market concentration among the hyperscalers and the rising strategic importance of cloud for AI explain the Commission’s heightened scrutiny; leading market reports document that the three major providers control roughly two‑thirds of global cloud infrastructure spending.
• The likely path forward is prolonged regulatory engagement, with significant implications for enterprise procurement, European cloud competitiveness and the design of competitive remedies — but no quick fixes.

The EU’s handling of cloud competition will set precedents for how platform rules apply to infrastructure: that process has begun in earnest, and the effects will be felt across enterprise IT strategies, vendor negotiations and the competitive landscape for years to come.

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Source: capacityglobal.com Google drops EU antitrust complaint against Microsoft as Brussels’ cloud probe intensifies - Capacity