Economic study

Economic study suggests refocusing anti-competitive attention on the cloud

Legacy software companies have been accused of distorting cloud markets through “sustainable, pernicious and unfair licensing practices” in a report commissioned by trade body Cloud Infrastructure Services Providers in Europe (CISPE).

Suggesting that the EU broaden the scope of its anti-competitive investigations to include the cloud, CISPE commissioned Frederic Jenny – who chairs the OECD’s competition committee – to produce the report in his personal capacity.

Released today, CISPE said the study had been shared with MEPs, the Council and the European Commission as part of the review of the Digital Markets Act (DMA).

Highlighting “sustainable, pernicious and unfair licensing practices” which it says “have a detrimental effect on European enterprises’ efforts to move to the cloud”, the study called for the behaviors described to be outlawed in the AMD.

Moreover, “not only are [unfair licensing practices] cost organizations of all sizes and across industries millions of dollars, but they stifle innovation and limit growth.”

The document continues: “It is clear that some players intend to extend this damage as they seek to secure their own dominance in the emerging cloud infrastructure environment. The money that could be spent to develop European services for European consumers is diverted into the pockets of some of the richest and most important software companies by unfair means.”

Specifically naming Microsoft, Oracle and SAP as “among those who deploy unfair licensing practices to limit choice and harm competition”, Jenny drew three key conclusions: the de facto price of the Microsoft Office productivity suite is more high when purchased for use on third-party clouds; bring your own license agreements gone; and billing actual users versus potential users.

Additionally, CISPE said the research provided evidence of:

  • Legacy software players such as Microsoft leverage bundling tactics to win tenders (often after initially losing) by offering cloud infrastructure (Azure) for free with upcoming legacy software license renewals;

  • Requesting customer information from its partners for “software billing purposes” but then approaching customers to switch cloud infrastructure providers;

  • Intentionally reduced compatibility to force customers to use a specific cloud infrastructure;

  • Artificially limit data portability;

  • Linking products to make third-party software less appealing;

  • Limited interoperability.

The named vendors have yet to respond to the report, however, April financial results from Microsoft and Google showed significant cloud revenue growth, while Synergy Research Group data released today revealed that Amazon, Microsoft and Google account for 63% of cloud spend. dollars.

According to Ensono’s report Cloud Clarity: A Snapshot of the Cloud in 2021Microsoft Azure ranks as the most popular public cloud provider (with 58% of responses), followed by Google Cloud (41%), IBM (40%) and AWS (38%).

Gordon McKenna, Public Cloud CTO of Ensono, said: “With new EU rules not yet set in stone, industry leaders should wait to see how this legislation takes shape and what will be the implications for suppliers and their customers.

“One trend is clear: companies want to adopt a cloud infrastructure that allows them to exploit the best services offered by different providers. Multi-cloud is the direction of travel for the industry and vendors that put flexibility, transparency and autonomy at the heart of their offering will be well positioned in the future.