Microsoft is back in the dock over cloud licensing, and this time the dispute sits at the intersection of antitrust law, enterprise procurement strategy, and the future shape of the cloud market itself — a dispute that could change how UK organisations buy and run Windows Server workloads.
Background / Overview
The Competition Appeal Tribunal (CAT) in London has been asked to certify a large opt‑out collective action brought by Dr Maria Luisa Stasi against Microsoft. The application — registered in early December 2024 and publicly filed as a Summary of Collective Proceedings Claim Form — alleges that Microsoft’s licensing practices for
Windows Server have been used to make it materially more expensive to run Microsoft workloads on rival clouds (Amazon Web Services, Google Cloud and Alibaba Cloud) than on Microsoft’s own
Azure service.
The proposed class defined in the court filing covers organisations that obtained a licence to use Windows Server from those rival cloud providers during a claim period beginning 3 December 2018. That filing sets aggregate damage estimates in the range of roughly
£1.7 billion to £2.1 billion, and identifies two central theories of harm: a
wholesale pricing differential in Service Provider License Agreements (SPLAs) versus Azure pricing (the “SPLA Pricing Abuse”), and a separate
re‑licensing pathway that the claimants say allows on‑premises licence holders to migrate workloads to Azure without paying what they would be charged to do the same on a Listed Provider (the “Re‑Licensing Abuse”).
The CAT must now decide whether to grant a Collective Proceedings Order (CPO) allowing the action to proceed as a certified class case. The CPO hearing was listed for 11 December 2025, and the procedural record shows the claim seeks to run on an
opt‑out basis, meaning eligible organisations would automatically be in the class unless they opt out.
All of this comes against a backdrop of regulatory scrutiny. The UK Competition and Markets Authority (CMA) published a final investigation into public cloud infrastructure services in July 2025 that flagged concerns about market concentration and identified Microsoft’s licensing conduct as a potential driver of competitive harm. The European Commission and other bodies have also been probing cloud market practices, and trade bodies and smaller cloud providers have long complained about differential pricing and interoperability barriers.
What the claim actually says: the mechanics of the allegations
The two alleged licensing abuses
The claim form frames the case around two concrete practices:
- SPLA Pricing Abuse — Certain Microsoft Service Provider License Agreements (SPLAs) for Windows Server and related products charge wholesale prices to cloud providers that are higher than the prices Microsoft charges customers using Azure. The claim contends that this price gap inflates rival cloud providers’ costs and, in turn, the prices they charge end customers for hosting Windows Server workloads.
- Re‑Licensing Abuse — Microsoft allegedly allows a holder of an on‑premises licence with Software Assurance to run that licence on Azure without paying fresh re‑licensing fees, but requires a substantial re‑licensing payment to run the same licence on a Listed Provider. That asymmetry, the claim says, makes Azure comparatively cheaper for licence mobility and effectively steers customers toward Microsoft’s cloud.
Both practices are described in the filing as parts of a coherent strategy to use Microsoft’s dominant position in the server operating system market to favour Azure in the cloud infrastructure market.
Class size, claim period and damage numbers (what’s verifiable)
- The proposed class is defined as “all organisations” that obtained a licence to run Windows Server from a Listed Provider during the Claim Period. The filing identifies approximately 59,000 members in the proposed class.
- The claim period in the filed documents begins on 3 December 2018 and runs to judgment.
- Aggregate damages in the filing are estimated between c. £1.7 billion and £2.1 billion, with the SPLA Pricing Abuse estimated at about £1.7 billion over six years and the Re‑Licensing Abuse driving total potential exposure up to around £2.1 billion.
These numbers come from the collective proceedings claim materials lodged at the CAT and reflect the claimant’s own quantification methodology based on publicly available prices and other data.
What the claim asks the court to do
The proceedings seek:
- Aggregate damages on behalf of the class;
- Interest and costs;
- An opt‑out collective proceedings order so damages can be pursued in one action rather than thousands of separate suits.
The filing stresses the
procedural case for a class action — the class is numerically large, common issues (market definition, dominance, abuse, causation and quantum) predominate, and an aggregate approach is said to be the most economically and procedurally efficient route for redress.
Regulatory context: why this is more than a private dispute
The legal action does not sit in a vacuum. For two years UK authorities and market participants have been digging into how the cloud market works and whether dominant firms are using software licensing to entrench advantage.
- The UK market investigation into public cloud infrastructure services closed with a final decision in July 2025. That inquiry found high concentration (Microsoft and AWS accounting for very large market shares), structural barriers to switching, and commercial or technical constraints that can make it difficult for customers to move workloads between providers.
- Importantly, the CMA’s final decision flagged pricing and quality differences when customers use Microsoft software on Azure versus rival clouds, and raised concerns that Microsoft’s licensing practices may be making competing cloud services less attractive.
- Parallel action in Europe has included trade body engagement and targeted commitments by Microsoft with some European cloud providers, and the European Commission has signalled its own investigative interest in cloud market dynamics.
Put simply: regulators have been primed to see this as a market‑level problem, not just an isolated price dispute between a vendor and a customer.
Microsoft’s defence and predictable litigation challenges
Microsoft has pushed back publicly, characterising the action as opportunistic litigation backed by funders, and arguing the claim is legally and economically weak.
The company’s core defences can be expected to include:
- Market definition and competition: Microsoft will argue the cloud market is dynamic and competitive and that customers freely choose cloud providers for many reasons. Demonstrating that licensing caused the customers to pick Azure rather than AWS or Google will be a hard economic task for the claimant.
- Causation and quantification: Proving class‑wide causation and establishing a reliable methodology for damages across tens of thousands of organisations is one of the main hurdles. Microsoft will attack aggregate methodologies and stress heterogeneity of customers, workloads and procurement terms.
- Legitimate business justifications: Microsoft will contend that pricing differences reflect legitimate cost differentials, contractual choices, or product packaging, rather than an unlawful foreclosure strategy.
- Data asymmetry and evidential burden: Microsoft is likely to emphasise that the precise pricing and contractual terms for SPLAs and re‑licensing across thousands of customers are internal matters; the claimants will have to show a credible route to obtaining or reconstructing that evidence.
These are typical, well‑worn vectors of defence in large antitrust damages claims — and they help explain why defendants often fight hard at the certification stage (CPO) rather than settling early.
Litigation economics: funding, costs and risk allocation
Class actions at this scale require backers. The proposed class representative’s legal team has secured litigation funding arrangements and insurance mechanisms to underwrite the expense and the risk of adverse costs.
- Financing and insurance make the action viable: third‑party litigation funding and after‑the‑event (ATE) insurance reduce the PCR’s direct cash exposure and provide the resources to pursue complex expert economics and discovery.
- The claim form and public reporting reference litigation funding arrangements to cover legal fees, disbursements and premiums for protective insurance.
This funding model is now commonplace in UK collective competition actions, but it also attracts criticism — defendants argue funders create perverse incentives and skew commercial settlement dynamics.
Strengths of the claimant’s case
Several features make this more than a speculative grievance:
- Regulatory corroboration: The CMA’s market investigation concluded that pricing differentials and restrictive licensing practices exist and are capable of harming competition. That regulatory work gives the claimants a strong factual foundation and a roadmap for the core theories of harm.
- Clear legal theories: The two alleged abuses (SPLA Pricing and Re‑Licensing) are concrete and specific, not vague complaints about “lock‑in”. That specificity helps when drafting common issues and damages models.
- Large, identifiable class: The proposed class definition is administratively workable — licence purchases from Listed Providers are trackable, which reduces the classic “who is in and who is out” problem for class certification.
- Political and public momentum: Regulators, trade bodies and many smaller cloud vendors have all articulated similar competitive concerns. That convergence strengthens the policy argument and can influence tribunal perceptions.
Weaknesses, evidentiary gaps and legal risks for the claimant
But the road to a trial victory is steep:
- Aggregate causation is hard: Establishing that Microsoft’s licensing decisions caused measurable harm across tens of thousands of varied organisations will require robust econometric models and likely confidential discovery from Microsoft and cloud providers.
- Heterogeneity of the class: Organisations differ wildly in how they consume cloud services and licence Microsoft software. Such heterogeneity complicates any single damages approach and gives defendants many routes to undermine class‑wide estimates.
- Timing and legal standards: The CAT evaluates criteria for a CPO with rigour. Even if the CPO is granted, the ultimate legal standard for liability under the Competition Act and Article 102 will demand careful proof of abuse and anti‑competitive effect.
- Potential offsets and mitigation: Microsoft will point to discounts, promotions, alternative licensing programmes (e.g., hybrid benefits, pay‑as‑you‑go models) and negotiated commercial terms that could reduce or negate alleged overcharges for any given customer.
- Evidential friction around “quality” claims: The accusation that Microsoft intentionally makes it more technically difficult to run workloads on rival clouds is harder to quantify and prove than price differentials alone. Technical claims demand specialist evidence and careful, replicable demonstrations.
Given these considerations, certification is a major milestone — but it is far from decisive proof of liability or damages.
Market and policy implications if the claim succeeds (or even if it doesn’t)
This litigation has consequences beyond any award to class members.
- Contractual change across the industry: A successful claim or consequential regulatory remedies could force Microsoft and other software vendors to restructure licence mobility arrangements, pricing parity commitments, and re‑licensing terms.
- Procurement and cloud strategy adjustments: Public sector and private buyers will need to re‑assess total cost of ownership models for cloud migrations and understand whether existing licence terms embed hidden premiums for non‑Azure hosting.
- Incentives for smaller cloud providers: A legal win or regulatory intervention could improve competitive parity, making it easier for smaller and regional providers to compete for Microsoft‑dependent workloads.
- Precedent for follow‑on damages cases: A certified and successful collective action would encourage more group claims against dominant platform vendors, potentially altering litigation risk calculus for large enterprise software firms.
- Regulatory backstops: Separately, the CMA’s recommendations that the government consider “Strategic Market Status” investigations for the largest cloud providers could produce regulatory obligations similar to digital market gatekeeper regimes elsewhere, reducing the need to rely solely on litigation for structural change.
What the courtroom fight will hinge on: five practical battlegrounds
- Certification (CPO) — Can the tribunal be satisfied that common issues and class identification justify a single collective proceeding?
- Economics and methodology — Are the claimants’ experts able to present a reliable aggregate damages model that survives Daubert‑like cross‑examination in the CAT context?
- Discovery and disclosure — Will Microsoft be compelled to disclose internal pricing, partner agreements and decision documents that illuminate the alleged strategy?
- Technical evidence on interoperability — Can the claimants prove the technical or contractual barriers that allegedly make rival clouds less attractive or more expensive?
- Regulatory interplay — How will contemporaneous CMA and EU probes, along with any commitments Microsoft has made to trade bodies, influence judicial fact‑finding and the court’s view of harm?
Practical advice for IT and procurement leaders (what organisations should be doing right now)
- Inventory Microsoft license usage and history — Identify where Windows Server and other Microsoft products run, whether on‑premises or in cloud instances, and document any migrations since December 2018.
- Preserve procurement records — Keep agreements, price lists, re‑licensing invoices and correspondence with cloud providers and Microsoft. In the event of a class proceeding, records will be the raw material of claims or defences.
- Review licensing options — Understand hybrid and mobility programmes (e.g., licence mobility, Azure Hybrid Benefit, pay‑as‑you‑go) and their eligibility terms; consider if renegotiation or vendor engagement is appropriate.
- Assess audit and compliance risk — Vendor audits have been cited as a potential deterrent to class participation; identify and mitigate any outstanding compliance issues proactively.
- Strategic diversification — Revisit migration and contingency plans. Where appropriate, adopt multi‑cloud patterns and containerisation that reduce lock‑in risk.
Wider industry reactions and the politics of intervention
Responses from cloud incumbents, smaller providers and trade bodies have been predictable but revealing. Smaller cloud vendors characterise Microsoft’s licensing differential as a structural barrier that freezes competition and undermines innovation. For hyperscalers and Microsoft, the counter‑narrative is that the market is highly competitive, and commercial pricing differences are lawful business strategy.
Regulators are increasingly sceptical about benign explanations. The CMA’s final report was explicit about the potential foreclosure effects of licensing practices and recommended that the UK consider formal designation procedures to bring tougher, bespoke remedies to dominant cloud players.
Policy makers face a tough balancing act: imposing heavy-handed regulation could dampen investment incentives and complicate global cloud economics, while under‑enforcement risks entrenching dominance and raising costs for businesses.
What to watch next (timeline and likely scenarios)
- CPO decision at the CAT — the tribunal’s ruling on certification is the immediate event to monitor; a refusal would likely end the class action as presented, while a grant would push the matter toward discovery and trial preparation.
- Regulatory moves — expect the CMA to pursue its recommended follow‑ons, including possible Strategic Market Status (SMS) investigations in 2026, and the European Commission’s parallel inquiries to continue to unfold.
- Discovery and evidence — if certified, the case will enter evidence‑gathering, where internal documents and pricing data will be made central. That process will illuminate the practical realities of licence pricing across clouds.
- Settlement dynamics — defendants often reassess the economics of settlement after disclosure. A midstream settlement is possible, but the scale of the damages claimed and reputational stakes make a quick deal uncertain.
- Global ripple effects — outcomes in the UK and EU could prompt similar claims or policy responses elsewhere, including in jurisdictions that are watching dominant cloud platform behaviour closely.
Conclusion
This litigation puts a spotlight on a fundamental commercial fault line in the modern cloud economy: the interface between proprietary enterprise software licensing and platform competition. The CAT case — if certified and ultimately successful — could force large vendors to adopt pricing and licensing arrangements that better support customer mobility and multi‑cloud choice. Even if the courts stop short of final liability, the combination of litigation, regulatory scrutiny and industry pressure is already nudging the market toward greater transparency on licensing and price parity.
For organisations, the near‑term imperative is pragmatic: catalogue Microsoft licence use, preserve procurement evidence, and update cloud‑migration and audit readiness plans. For vendors and policy makers, the case is a warning that customers, competitors and enforcers are prepared to pursue systemic change where market structures appear to lock in advantage.
Because this dispute is both technical and legal — and because the facts will turn heavily on internal contracts, pricing schedules and expert economic evidence — the eventual outcome will hinge not on headlines but on discovery and data. Whatever the tribunal decides at the CPO stage, the broader debate about cloud competition, interoperability and the costs businesses face for moving workloads between platforms is now firmly in the public domain — and unlikely to fade any time soon.
Source: theregister.com
Here we go again: Microsoft in UK court over cloud licensing