European tech rules must also apply to cloud providers, say campaigners
Firms like Microsoft and Oracle can use their power exclude other cloud infrastructure providers from the market, says a new report
Draft EU rules that aim to control the power of tech giants like Google, Amazon, Facebook and Apple should also be applied to cloud service providers to limit potential anti-competitive practices, according to a new study.
The assertion comes amid concerns that some EU lawmakers who are reviewing the Digital Markets Act (DMA) - proposed by EU antitrust chief Margrethe Vestager - may be lenient towards cloud computing firms.
The report [pdf] was prepared by Frederic Jenny, the chairman of the Organization for Economic Cooperation and Development's (OECD) Competition Committee, in his personal capacity for trade body Cloud Infrastructure Services Providers in Europe (CISPE).
The study authors interviewed about 25 firms that use cloud computing services. Some complained that big cloud service providers force 'unfair' and 'anti-competitive' licensing practices on customers globally. The respondents said that some big tech firms' licensing terms force customers to pay again to use software they already own when they move to a competitor.
Microsoft and Oracle are the primary targets of the report, which suggests that these companies' dominant position enables them 'to engage in potentially anti-competitive strategies to exclude other cloud infrastructure providers from the market'.
It further alleges that 'not only are [cloud providers] costing organisations of all sizes and in all sectors millions of Euros, but they are chilling innovation and restricting growth.
'It is clear that certain players mean to extend these harms as they seek to secure their own dominance in the emerging cloud infrastructure environment', the document continues. It adds, 'money that could be spent on developing European services for European consumers is being diverted to the pockets of some of the wealthiest and largest software firms through unfair means.'
The report has been distributed to MEPs, the European Council and the European Commission (EC) as they debate on the Digital Markets Act (DMA).
"Jenny's research… suggests a vital role for the proposed Digital Markets Act in identifying certain software vendors as Gatekeepers and ensuing that these behaviours are well covered in its ex ante [forecasting] provisions," Alban Schmutz, president of CISPE, stated.
"It is clear to all of us that certain legacy software providers are seeking to limit choice in cloud infrastructure through these unfair license terms. Now is the time to act to protect the future growth, innovation and sustainability of European cloud services," he added.
The European Commission last year introduced two legislative proposals as part of a major attempt to overhaul the digital space and regulate big technology firms.
The EU proposals - the Digital Services Act (DSA) and the Digital Markets Act (DMA) - will apply on all digital services, including online market places, social media and other online platforms operating in the EU.
The main aim of introducing the rules is to 'better protect consumers and their fundamental rights online', says the European Commission. It intends for the regulations to create a level playing field and to lead to 'fairer and more open' digital markets in the region.
The draft regulations propose imposing financial penalties on tech firms - up to 6 per cent (in the DSA) and 10 per cent (in the DMA) of the firm's global annual turnover - if they refuse to abide by the rules.
Companies who repeatedly break the rules could be forced to divest certain businesses, if no other viable alternative is available to ensure compliance.