Microsoft returned to a London antitrust tribunal this week to argue that a proposed collective action seeking up to £2.1 billion over Windows Server licensing should be blocked at the gate because the claimants — led by competition lawyer Maria Luisa Stasi — have not identified a viable legal route to trial or a workable method for calculating damages.
The dispute stems from a collective proceedings application filed in the Competition Appeal Tribunal (CAT) that alleges Microsoft charged higher prices and imposed licensing rules that disadvantage organisations running Windows Server on rival cloud platforms such as Amazon Web Services (AWS), Google Cloud Platform (GCP) and Alibaba Cloud. The claim seeks certification on an opt‑out basis on behalf of nearly 60,000 UK businesses and puts the upper bound of alleged aggregate loss at roughly £2.1 billion. At issue in the certification hearing — formally, the Collective Proceedings Order (CPO) stage — is whether the claim can proceed as a class action and whether the pleadings and proposed common methodology are legally and economically capable of delivering a trialable case. Microsoft says they are not. The claimant argues the company’s licensing architecture and commercial terms have made running Windows Server on non‑Azure platforms more expensive and, in some respects, degraded user experience — conduct that, the claim contends, amounts to an “abusive strategy” to advantage Azure over rivals.
If the tribunal accepts Microsoft’s argument, the claim will likely founder, leaving smaller, individual actions as the remaining route for redress. If the tribunal certifies the class, the litigation will move into a protracted phase of expert evidence, discovery and high‑stakes negotiation that could reshape how cloud licences are priced and enforced in Europe and beyond. Either way, the case is a pivotal test of how competition law adapts to the technical and contractual fabric of modern cloud computing.
Source: Law360 Microsoft Says £2B Class Action Fails To ID Viable Legal Test - Law360
Background / Overview
The dispute stems from a collective proceedings application filed in the Competition Appeal Tribunal (CAT) that alleges Microsoft charged higher prices and imposed licensing rules that disadvantage organisations running Windows Server on rival cloud platforms such as Amazon Web Services (AWS), Google Cloud Platform (GCP) and Alibaba Cloud. The claim seeks certification on an opt‑out basis on behalf of nearly 60,000 UK businesses and puts the upper bound of alleged aggregate loss at roughly £2.1 billion. At issue in the certification hearing — formally, the Collective Proceedings Order (CPO) stage — is whether the claim can proceed as a class action and whether the pleadings and proposed common methodology are legally and economically capable of delivering a trialable case. Microsoft says they are not. The claimant argues the company’s licensing architecture and commercial terms have made running Windows Server on non‑Azure platforms more expensive and, in some respects, degraded user experience — conduct that, the claim contends, amounts to an “abusive strategy” to advantage Azure over rivals. What the claim actually alleges
Two principal theories of harm
The filed claim identifies two core theories of harm that underpin the damages estimate:- SPLA Pricing Differential (Service Provider License Agreement) Abuse: The claimants argue that Microsoft’s SPLA pricing and related commercial practices mean that running Windows Server on a “Listed Provider” (a rival cloud provider) is systematically more expensive than running the same workload on Azure, producing a predictable and quantifiable overcharge for customers forced (or nudged) onto competitor clouds.
- Re‑licensing Pathway Abuse: The second theory alleges a re‑licensing mechanism by which on‑premises license holders can more cheaply migrate workloads to Azure than to rival clouds — effectively creating a migration discount or pathway that is not equivalently available for third‑party clouds. That differential, the claim says, both raises costs on rival clouds and restricts meaningful choice.
Allegations of degraded technical performance
Beyond pricing, the claim also includes assertions that Microsoft introduced settings or contractual terms that degraded the user experience of Windows Server on rival clouds — for example, by limiting certain maintenance or support capabilities or by imposing friction that raises operational costs. These technical claims are framed as part of a broader “coherent abusive strategy” to leverage Microsoft’s dominance in software into preferential treatment for Azure. The allegation of performance degradation remains an asserted fact by claimants and supporters (including some competing cloud providers) rather than an adjudicated finding.Microsoft’s defence at the CPO stage
Microsoft’s lawyers told the CAT the claim should be refused certification because the claimant has not proposed a workable legal and economic blueprint for how the tribunal would identify victims, measure losses and determine causation on a class‑wide basis. In short: the company says the claimant’s approach lacks a viable test for trial and therefore the case is unsuitable for collective treatment. Key elements of Microsoft’s defence include:- The damages methodology is undeveloped or unworkable for thousands of heterogeneous businesses that used various licences and consumed cloud services differently.
- The market is highly dynamic and competitive; price differentials claimed by the claimant do not automatically translate into anticompetitive harm because rival cloud providers retain the margins and ability to compete. Microsoft argues that competition, not foreclosure, best explains observed outcomes.
- Allowing the case to proceed without a clear, common methodology risks procedural unfairness and will generate more satellite litigation rather than resolving shared legal questions efficiently.
The legal mechanics: Collective Proceedings Orders and opt‑out certification
Why the CPO matters
In the UK, a Collective Proceedings Order converts an opt‑in-style claim into an opt‑out collective action for competition law infringements — a powerful mechanism that can sweep in thousands of claimants without their affirmative participation. The CAT will only grant a CPO where it is satisfied that:- The claim raises common issues suitable for collective treatment.
- The proposed class definition is coherent and manageable.
- The claim’s methodology for proving loss is legally and practically capable of establishing loss on a common basis.
Microsoft’s tactical emphasis
Microsoft’s argument at the hearing is a textbook CPO defence: attack the commonality and trialability of the claim’s method for quantifying loss. If the tribunal accepts Microsoft’s critique that there is no viable, generalisable test or formula to identify who suffered losses and how much, the CAT can (and often will) refuse certification. That outcome would effectively kill the class action route even though individual claims could continue.The regulatory backdrop: CMA findings and a broader scrutiny of cloud markets
This litigation did not arise in a vacuum. The Competition and Markets Authority (CMA) carried out a high‑profile market investigation into public cloud infrastructure services and published a final decision in late July 2025 that identified a number of features of concern in the market — including high concentration, switching frictions, and the possible adverse effects of Microsoft’s licensing terms on the competitive position of rival cloud providers. The CMA’s decision did not itself adjudicate liability in civil claims, but it materially shaped the regulatory and evidentiary context in which the CAT is now being asked to certify the collective claim. The CMA’s final report also recommended that its digital markets powers be used to consider Strategic Market Status investigations for the largest providers — a step that could lead to binding conduct remedies under the UK’s digital markets regime. Those policy threads give the class action political and institutional resonance beyond the private civil litigants.Economic and technical complexity: why damages modelling will be fought slide by slide
Calculating aggregate damages in a case that ties software licensing with cloud consumption is inherently complex. The principal technical and economic questions include:- Establishing a robust counterfactual — what would prices, migration patterns and performance have looked like absent Microsoft’s alleged conduct?
- Measuring pass‑through to end customers when licensing fees interact with complex reseller agreements, committed‑use discounts, and multi‑cloud contracts.
- Accounting for heterogeneous claimants — customers range from small enterprises with simple workloads to large organisations with bespoke licensing negotiations and hybrid architectures.
- Separating competition effects (did rivals lose customers or revenue because of the conduct? from ordinary business variance in a market where multi‑cloud strategies and switching incentives can be fluid.
Practical consequences if the case is certified
If the CAT certifies the CPO and the claim proceeds as an opt‑out class action, several tangible consequences follow immediately:- Thousands of UK organisations automatically become class members unless they opt out — increasing litigation leverage and settlement pressure.
- Microsoft would face exposure to a multi‑hundred‑million to billion‑pound damages claim and the attendant legal, discovery and reputational costs.
- The case would likely require extensive expert econometric evidence, discovery of licensing contracts and internal pricing documents, and possibly long technical hearings about performance differences across cloud platforms.
- Even a settlement could include behavioural remedies or covenant changes in licensing practices; such outcomes would echo regulatory aims to flatten switching frictions and improve cross‑platform interoperability.
Risks for Microsoft, rivals, and the cloud ecosystem
For Microsoft
- Financial exposure: If proven, the damages estimate is sizeable. Even absent a full £2.1bn award, settlements or remedial measures could be material.
- Policy and regulatory spin: Litigation outcomes could accelerate regulatory actions — including possible digital markets interventions or bespoke conduct obligations.
- Reputational and commercial friction: Enterprise customers sensitive to lock‑in concerns may reassess multi‑cloud commitments or negotiating posture.
For AWS, Google and other cloud providers
- Vindication vs. disruption: A successful collective case that compels licensing or interoperability changes would reduce some switching frictions; but prolonged litigation raises market uncertainty and can distract rivals’ commercial plans.
- Competitive leverage: Rivals could use litigation and regulatory findings as commercial pressure points with enterprise buyers.
For customers and integrators
- Potential relief: If the claim leads to negotiated licences or reduced costs on rival platforms, many organisations could benefit from lower migration costs and improved cross‑platform parity.
- Short‑term complexity: Customers will face uncertainty during litigation — contract negotiations and migration plans may be postponed pending clarity on licensing risk.
Possible outcomes: a roadmap of scenarios
- CPO refused — Tribunal accepts Microsoft’s argument; the collective action route is closed and claimants must pursue individual or grouped claims with opt‑in mechanics. This is the outcome Microsoft is actively pushing for.
- CPO granted and case certified to proceed — The claim moves to merits discovery and trial; settlement pressure rises, and either outcome could reshape negotiation power in cloud licensing.
- Early settlement — Parties agree to a global settlement that may include monetary relief and licensing concessions; likely if both sides prefer certainty and to avoid prolonged discovery.
- Regulatory follow‑through — Whether or not civil litigation succeeds, the CMA and other regulators could press for remedies via digital markets powers or competition enforcement actions, producing non‑court mandates to change behaviour.
Precedents and lessons from related litigation
Class and collective proceedings in competition law frequently hinge on trialability — not merely legal theory. UK case law has repeatedly shown that a clever antitrust theory is insufficient if no workable common proof exists to carry the class as a whole to a single adjudication. The CAT’s gatekeeping role, therefore, places a premium on properly formulated common issues and a credible damages model that judges can apply across the class. Microsoft’s legal strategy reflects that landscape: attack proof methodology early, and the class action path can be narrowed or blocked entirely.Critical analysis: strengths, weaknesses, and open questions
Strengths of the claimant’s case
- Policy backdrop: The CMA’s findings lend contemporaneous policy weight to the central allegations about licensing practices and switching frictions. Regulators’ scrutiny strengthens the factual matrix within which a civil claim can argue harm.
- Scale and clarity of alleged pricing differentials: Where clear, documented pricing differentials and re‑licensing pathways exist, they can be modelled and presented as common issues, which is the claimant’s path to certification.
Weaknesses and legal risks for claimants
- Methodology fragility: The biggest practical vulnerability is the damages model. If the claimant cannot show a credible, class‑wide formula for identifying harm, the CAT is likely to refuse certification. Microsoft has focused precisely on this problem.
- Heterogeneity of members: Thousands of businesses, varied licensing terms and different cloud architectures complicate any one‑size‑fits‑all approach to loss measurement. This heterogeneity increases the risk that substantial individual issues will overwhelm common issues at trial.
Risks and challenges for Microsoft
- Regulatory tailwinds: Even if the civil claim is dismissed, regulatory processes can lead to mandatory conduct changes or designations that affect commercial behaviour.
- Discovery exposure: If certified, Microsoft faces deep discovery into pricing, product decisions and internal communications — a reputational and strategic risk even if the company ultimately prevails.
Unverifiable or contested claims
- The allegation that Microsoft “degrades” the user experience on rival clouds is a contested technical claim. It is presently an assertion by claimants and competitors and would require fine‑grained technical proof at trial. Until subjected to neutral forensic analysis in court, such allegations should be treated as contentious and unproven.
What to watch next
- The CAT’s decision on the CPO application — this procedural ruling will determine whether the case can proceed as an opt‑out collective claim.
- Any contemporaneous regulatory action by the CMA or the emergence of Strategic Market Status inquiries that could impose conduct rules on Microsoft or other hyperscalers.
- Whether the parties pursue settlement talks once the CAT sets a schedule for discovery; large cases often settle once the contours of evidence become clear.
Conclusion
The proposed £2.1 billion collective claim against Microsoft crystallises the collision of competition law, complex technology licensing and the realities of today’s multi‑cloud world. The claimant benefits from a policy environment that is attentive to switching costs and licensing frictions, and the CMA’s findings give the complaint heft. But the CAT’s certification gate is designed to weed out claims that cannot be adjudicated on a class‑wide basis — and Microsoft’s tactic is a powerful procedural one: show the tribunal there is no practicable legal test or damages formula and the collective path collapses.If the tribunal accepts Microsoft’s argument, the claim will likely founder, leaving smaller, individual actions as the remaining route for redress. If the tribunal certifies the class, the litigation will move into a protracted phase of expert evidence, discovery and high‑stakes negotiation that could reshape how cloud licences are priced and enforced in Europe and beyond. Either way, the case is a pivotal test of how competition law adapts to the technical and contractual fabric of modern cloud computing.
Source: Law360 Microsoft Says £2B Class Action Fails To ID Viable Legal Test - Law360
