Microsoft is facing a £1 billion lawsuit in the UK, accusing the tech giant of charging higher fees to businesses using rival cloud platforms, in a case that could have significant implications for the cloud computing industry. The lawsuit, filed in the UK's Competition Appeal Tribunal, alleges that Microsoft charged customers of Amazon's AWS, Google Cloud Platform (GCP), and Alibaba Cloud higher fees for using Windows Server compared to customers of its own Azure cloud computing service.

The lawsuit is the latest development in a growing trend of competition complaints and scrutiny of cloud computing practices. Just last week, the US Federal Trade Commission (FTC) opened a broad antitrust probe into Microsoft's software licensing and cloud computing business. In Europe, the UK's Competition and Markets Authority (CMA) launched a market investigation into cloud computing in October 2023, following a referral from the communications regulator Ofcom, which had flagged concerns over the market.

The CMA's investigation remains ongoing, with a report expected next year. However, the litigants in the UK lawsuit are not waiting for the CMA's verdict on Microsoft's discounts before filing suit. The lawsuit is being funded by LCM Funding UK Limited, the UK office of the international dispute finance provider, Litigation Capital Management (LCM).

The lawsuit has been filed by Dr. Maria Luisa Stasi, a competition law and digital markets regulation expert, on behalf of "thousands" of local businesses and organizations that the collective action alleges were overcharged for using Windows Server. Stasi commented, "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. By doing so, Microsoft is trying to force customers into using its cloud computing service Azure and restricting competition in the sector."

The lawsuit aims to challenge Microsoft's anti-competitive behavior, push the company to reveal exactly how much businesses in the UK have been illegally penalized, and return the money to organizations that have been unfairly overcharged. UK customers of Microsoft are being included on an opt-out basis, meaning they are automatically part of the action unless they actively choose to exclude themselves. There are no costs for being included in the litigation, with only the potential upside of winning damages if the suit prevails or Microsoft settles.

Notably, Microsoft has already paid "tens of millions in settlements" over the same practices in Europe, including a €20 million settlement with cloud services trade association CISPE in July. The CISPE settlement is likely to have contributed to driving forward the UK claim, although the headline damages figure is significantly higher than the reported settlement amount.

The lawsuit has significant implications for the cloud computing industry, which has been under increasing scrutiny in recent years. The case could set a precedent for how cloud computing companies operate and interact with their customers, and may lead to changes in the way companies like Microsoft license their software.

Microsoft has been contacted for a response to the lawsuit, but has yet to comment. As the case progresses, it will be closely watched by industry observers and could have far-reaching consequences for the tech giant and the cloud computing industry as a whole.