Google’s decision to withdraw its formal EU antitrust complaint against Microsoft’s cloud licensing practices on the same week the European Commission opened a wide-ranging probe into the cloud market crystallizes a new phase in the hyperscaler rivalry — one driven more by regulatory architecture and strategic positioning than by courtroom skirmishes alone.
The dispute traces back to Google's public complaint to EU authorities in late September 2024, when Google Cloud accused Microsoft of using legacy licensing rules and commercial manoeuvres to “lock” customers into Azure. Google argued those licensing terms created strong financial and operational disincentives for customers to move Windows Server and other Microsoft workloads to rival clouds — a practice Google framed as a form of vendor lock‑in that inflated costs and limited choice.
Parallel to Google’s action, a coalition of European cloud providers known as CISPE negotiated a settlement with Microsoft the previous year that aimed to reduce some licensing frictions for European hosters and service providers. That settlement — which critics described as partial and limited in scope — left Google and several hyperscalers outside the agreement, and debate continued over whether the changes truly remedied the structural concerns raised by customers and competitors.
In mid‑November 2025 the European Commission escalated the matter by launching market investigations under the Digital Markets Act (DMA) to assess whether Amazon Web Services (AWS) and Microsoft Azure should be designated as “gatekeepers” for cloud computing services. The Commission’s action opens a formal 12‑month evidence phase for gatekeeper assessments and a separate, longer horizontal probe to determine whether the DMA’s current obligations need adapting to the particular features of cloud markets.
Days after the Commission’s announcement, Google announced it had withdrawn its earlier complaint. Google framed the withdrawal as a tactical step: with the Commission now conducting direct market investigations addressing the same competitive dynamics, Google said the complaint was no longer necessary as a separate vehicle for redress.
Important points to note:
For businesses and public sector IT leaders, the unfolding regulatory drama represents both opportunity and risk. Clear, enforceable contractual protections and cloud‑resilient architectures are now essential defensive measures. For policymakers, the task is to strike a careful balance: protect contestability and customer choice without hamstringing the technical evolution of critical infrastructure.
In that balance lies the future shape of cloud competition in Europe — and the regulatory choices made over the next 12 to 18 months will determine whether the market becomes more open and interoperable, or whether new forms of complexity and compliance simply reshuffle the incumbents’ advantages.
Source: ET Telecom Google ditches EU antitrust complaint about Microsoft cloud amid EU probe
Background
The dispute traces back to Google's public complaint to EU authorities in late September 2024, when Google Cloud accused Microsoft of using legacy licensing rules and commercial manoeuvres to “lock” customers into Azure. Google argued those licensing terms created strong financial and operational disincentives for customers to move Windows Server and other Microsoft workloads to rival clouds — a practice Google framed as a form of vendor lock‑in that inflated costs and limited choice.Parallel to Google’s action, a coalition of European cloud providers known as CISPE negotiated a settlement with Microsoft the previous year that aimed to reduce some licensing frictions for European hosters and service providers. That settlement — which critics described as partial and limited in scope — left Google and several hyperscalers outside the agreement, and debate continued over whether the changes truly remedied the structural concerns raised by customers and competitors.
In mid‑November 2025 the European Commission escalated the matter by launching market investigations under the Digital Markets Act (DMA) to assess whether Amazon Web Services (AWS) and Microsoft Azure should be designated as “gatekeepers” for cloud computing services. The Commission’s action opens a formal 12‑month evidence phase for gatekeeper assessments and a separate, longer horizontal probe to determine whether the DMA’s current obligations need adapting to the particular features of cloud markets.
Days after the Commission’s announcement, Google announced it had withdrawn its earlier complaint. Google framed the withdrawal as a tactical step: with the Commission now conducting direct market investigations addressing the same competitive dynamics, Google said the complaint was no longer necessary as a separate vehicle for redress.
What exactly did Google allege?
The core claims
- Vendor lock‑in through licensing: Google said Microsoft’s licensing terms — particularly for Windows Server, SQL Server and user‑focused products — impose steep penalties and restrictions that make running those products on rival clouds prohibitively expensive or operationally second‑class.
- Pricing differentials: Google highlighted alleged mark‑ups and contractual differentials that make running Microsoft workloads on non‑Azure clouds far more expensive, citing examples of large multipliers applied to license‑transfer or hosted arrangements.
- Security and operational impacts: Google argued that asymmetric access to security updates and patching timelines could create degraded security outcomes for workloads run off Azure, further discouraging migration.
What Microsoft has said in response
Microsoft has consistently denied systemic misconduct, arguing that it has engaged constructively with European cloud providers and regulators. The company points to commercial agreements and technical programs designed to enable partner hosting, and it notes that some interoperability and licensing concessions have been implemented after industry dialogue. Microsoft has also warned that cloud rules driven by regulation risk unintended impacts on innovation and operational costs for customers.Why the timing matters: Commission probes vs. private complaints
The change in Google’s approach should be read through two lenses: process and leverage.- Process: Private complaints are one route to raise competition concerns, but the Commission’s market investigations and potential DMA gatekeeper designations are ex‑ante regulatory tools with far broader reach. The DMA empowers regulators to impose specific obligations on firms deemed to be “important gateways” — obligations that can require interoperability, prohibit self‑preferencing, and mandate data access regimes. A Commission probe launched under the DMA can lead to binding remedies that extend beyond the narrow relief a private complaint might achieve.
- Leverage: By withdrawing the complaint, Google signals confidence that the Commission’s own process will address the structural issues it raised — or at least that the Commission’s inquiry is a more effective lever than bilateral litigation or advocacy. At the same time, withdrawing removes one public adversarial proceeding and concentrates the evidentiary battle within the Commission’s investigatory apparatus, where Google and other stakeholders will still be able to supply evidence and push for policy outcomes.
The DMA angle: what ‘gatekeeper’ designation would mean for cloud
How DMA gatekeeper status could change cloud markets
If the Commission concludes AWS or Azure merit designation as cloud gatekeepers, the consequences are material and multifaceted:- Prescriptive obligations: Designated providers would face a list of do’s and don’ts — including requirements on interoperability, data portability, and restrictions on self‑preferencing.
- Operational changes: Providers might need to provide fair and non‑discriminatory access to APIs, remove contractual clauses that impose discriminatory pricing, and treat third‑party services and customers equally in ways that change product roadmaps and pricing.
- Enforcement teeth: Failure to comply can trigger heavy fines and follow‑on remedies. Designation also creates ongoing compliance obligations that alter product development and commercial negotiation dynamics.
Why the Commission can use DMA even when thresholds aren’t met
The cloud probes are notable because the DMA’s technical thresholds for gatekeeper designation are typically based on scale and user counts in consumer facing services. The Commission is explicitly exploring whether cloud providers, even without meeting those thresholds, may effectively operate as “important gateways” due to their critical infrastructure role for businesses and public sector clients. That reasoning is more sectoral and structural than the DMA’s original consumer‑platform focus.Strategic implications for the big players
For Google Cloud
- From public complaint to regulatory engagement: Google’s withdrawal signals a shift from a head‑to‑head public regulatory challenge toward influencing the Commission’s broader market investigation. It preserves Google’s ability to press for DMA‑style remedies while reducing public friction.
- Competitive positioning: Google avoids the optics of litigation fatigue and channels its advocacy into regulatory submissions, industry briefings and coalition building — a route that could deliver wider remedies (for example, mandatory interoperability rules) than a narrower complaint.
- Reputation & partner calculus: Google retains a posture of defending customer choice, which aligns with its multi‑cloud messaging. But stepping back from litigation may also reduce public pressure on Microsoft in the short term.
For Microsoft
- Regulatory scrutiny intensifies: The DMA investigations raise the prospect of binding obligations that would materially constrain Microsoft’s commercial flexibility on matters like licensing and product bundling.
- Defensive options: Microsoft can defend itself through technical evidence of why its licensing choices are legitimate, demonstrate the business and security rationales for differentiation, and negotiate limited remedies with regulators rather than sweeping mandates.
- Commercial risk: A gatekeeper designation, or narrower remedies from the Commission, could require Microsoft to reform specific licensing features and change partner programs — with ripple effects for pricing and enterprise procurement.
For AWS and other providers
- Collateral exposure: AWS, which dominates cloud with a larger market share than Azure in many markets, is also in the Commission’s crosshairs. The EU’s probe could produce symmetrical obligations for multiple hyperscalers, reducing the benefits of single‑vendor dominance.
- Strategic benefit for challengers: Smaller cloud providers and European sovereign cloud initiatives could gain a structural boost if the DMA leads to enhanced portability and fair access to key middleware and licensing components.
What enterprises and public sector customers should do now
Enterprises have an opening to renegotiate and harden commercial terms that preserve choice and portability. Practical steps include:- Audit existing license entitlements and migration clauses. Determine where migration costs, penalty clauses, or conditional update provisions might lock workloads in.
- Negotiate portability and patching parity clauses. Demand contractual parity for security updates, SLAs for patch timing, and explicit portability commitments.
- Require transparency on ‘listed provider’ or hoster designations. If a vendor reserves the right to limit functionality to certain hosts, ask for objective criteria and enforceable remedies.
- Insist on audit rights and independent verification. Build mechanisms to validate that promised interoperability or pricing thresholds are being honoured.
- Design for multi‑cloud resilience. Where technical and commercial constraints permit, architect workloads for portability to reduce the bargaining power of any single provider.
Technical nuance: licensing mechanisms and what regulators will look at
The debate hinges on technical and contractual details that are not always visible in headlines. Critical elements under scrutiny include:- License transfer and hosting fees: The rules governing whether perpetual or subscription licenses can be used on rival infrastructure, and at what incremental cost.
- Security update parity: Whether customers who host Microsoft software on third‑party clouds receive the same security updates and patch timelines as those on Azure.
- Product feature parity: Some capabilities (e.g., integrated management features or performance optimizations) may be reserved for the vendor’s own cloud, raising questions about discriminatory product design.
- Identity and authentication dependencies: Obligations to integrate or require vendor‑specific identity services (for example, using a company’s own identity service as a prerequisite) can create technical lock‑ins.
- Technical interoperability: API compatibility, data export formats, and standards adherence that enable seamless migration or hybrid deployment.
Strengths of the Commission’s approach — and emerging risks
Strengths
- Systemic view: The Commission’s sectoral probe takes a horizontal view, allowing regulators to assess systemic drivers of concentration and to recommend structural responses.
- Toolset maturity: The DMA introduces ex‑ante tools that can be applied before harm crystalizes into irreversible lock‑in, and the Commission can craft tailored obligations specific to cloud infrastructure.
- Level playing field potential: Remedies could level access to critical interfaces and reduce discrimination that tilts commercial negotiations toward hyperscalers.
Risks and unintended consequences
- Overreach and regulatory mismatch: The DMA was not initially designed for core infrastructure services. Applying consumer‑platform rules to cloud may produce obligations that are technically infeasible or economically distortionary.
- Innovation vs. regulation trade‑off: Heavy‑handed obligations could deter future investment in core infrastructure, slow product development, or raise compliance costs that are passed to customers.
- Fragmentation vs. standardisation paradox: Regulators want more interoperability, but forcing particular interoperability models risks creating a rigid market architecture that suppresses innovation. Technical standardisation is a delicate balance.
- Lobbying and capture: Big tech will intensify advocacy, and regulatory outcomes may be shaped by heavy lobbying and political pressure that tilt remedies away from customers’ practical needs.
What the withdrawal does — and doesn’t — change
Google’s withdrawal is chiefly procedural. It does not erase the factual record or the underlying competitive concerns. Rather, it consolidates the evidentiary confrontation in the Commission’s investigatory process, where regulators will evaluate multiple submissions — from cloud providers, mid‑size hosters, public bodies and independent experts.Important points to note:
- Evidence collection will continue. The Commission’s market investigations run on formal evidence‑gathering timelines. Interested parties still have the opportunity to submit data, documents and technical demonstrations.
- Private claims are not foreclosed. Withdrawal of a public complaint does not prevent firms or coalitions from providing evidence to the Commission or from later pursuing litigation in national courts if the Commission’s remedies prove insufficient.
- Policy outcomes may be broader. The DMA’s structural remedies could be more consequential than the relief a single complaint might target, especially if gatekeeper designation is pursued.
Timeline and key milestones to watch
- Immediate (weeks): Formal opening of the DMA market investigations and initial requests for information to AWS, Microsoft and other stakeholders.
- 3–6 months: Possible targeted hearings and technical sessions; early signals from the Commission about the scope of concerns.
- 12 months: The Commission aims to conclude the gatekeeper designation investigations within 12 months. If designation occurs, companies typically have a six‑month window to implement obligations.
- 12–18 months: The Commission’s horizontal probe into whether the DMA’s rules need updating for the cloud sector will likely extend longer, possibly producing recommendations for DMA adaptations or implementation guidance.
Practical takeaways for IT decision‑makers
- Do not assume stability: Licensing arrangements and supplier commitments can change quickly under regulatory pressure — treat current vendor claims as potentially time‑limited.
- Document everything: Maintain a clear audit trail on licensing discussions, promised features, patch behaviours and performance metrics to support future negotiations or regulatory submissions.
- Include exit and portability in RFPs: Make contractual portability, data export formats, and update parity mandatory procurement requirements.
- Plan for hybrid: Hybrid architectures and cloud‑agnostic tooling reduce migration friction and improve resilience.
- Monitor compliance programs: Track hyperscalers’ public commitments and any Commission rulings that could materially alter commercial terms.
Conclusion
Google’s withdrawal of its EU complaint reads less like retreat and more like a pivot into a larger, higher‑stakes arena. The European Commission’s decision to probe the cloud under the Digital Markets Act elevates the dispute from a bilateral complaint to a sectoral policy test. That shift has the potential to produce far‑reaching remedies — but also raises complex technical and economic trade‑offs.For businesses and public sector IT leaders, the unfolding regulatory drama represents both opportunity and risk. Clear, enforceable contractual protections and cloud‑resilient architectures are now essential defensive measures. For policymakers, the task is to strike a careful balance: protect contestability and customer choice without hamstringing the technical evolution of critical infrastructure.
In that balance lies the future shape of cloud competition in Europe — and the regulatory choices made over the next 12 to 18 months will determine whether the market becomes more open and interoperable, or whether new forms of complexity and compliance simply reshuffle the incumbents’ advantages.
Source: ET Telecom Google ditches EU antitrust complaint about Microsoft cloud amid EU probe
