Tribunal considers £2.1bn lawsuit against Microsoft

UK Competition Appeal Tribunal has begun deliberating whether class action case should proceed

The UK’s Competition Appeal Tribunal (CAT) has begun deliberating whether a £2.1 billion collective proceedings (class action) lawsuit against Microsoft should proceed to a full trial.

Microsoft is accused of overcharging thousands of British businesses for using its Windows Server software on rival cloud services including AWS and GCP compared to its own Azure platform.

Microsoft offers a cloud-optimised version of Windows Server that includes advanced management, security, and hotpatching capabilities, features that allow updates to be installed on Azure systems without requiring a reboot.

The case was brought in 2024 by competition lawyer Maria Luisa Stasi on behalf of nearly 60,000 UK businesses.

"Put simply, Microsoft is punishing UK businesses and organisations for using Google, Amazon and Alibaba for cloud computing by forcing them to pay more money for Windows Server," she said, as reported by Reuters.

"By doing so, Microsoft is trying to force customers into using its cloud computing service Azure and restricting competition in the sector."

The lawsuit alleges that Microsoft’s pricing practices and licensing restrictions create an uneven playing field, degrade the user experience on competitors’ platforms, and amount to an "abusive strategy" to perpetuate its dominant position in the cloud computing market.

The potential fine of £2.1 billion was estimated by the claimants based on the alleged overcharging of UK businesses. A court will ultimately determine the final amount if Microsoft is found liable.

Separately, The UK Competition and Markets Authority (CMA) has been investigating competition in cloud services, concluding this summer that “Microsoft’s licensing practices are adversely impacting the competitiveness of AWS and Google in the supply of cloud services, particularly in competing for customers that purchase cloud services which use the relevant Microsoft software as an input.”

The CMA’s findings support the allegations in the lawsuit, though the CMA is not directly involved in the legal action.

The EU is also investigating Microsoft and other cloud companies on competition grounds, although in November Google withdrew the antitrust complaint it had filed targeting Microsoft's cloud licensing practices. There are also ongoing cloud competition investigations in the US.

The CAT does not provide expected timelines. Deliberations can take weeks or months to conclude.

Microsoft has said the case should be thrown out because of questions about how any potential compensation has been calculated. It says that offering Windows Server on rival platforms is a sign that healthy competition is working.