- Microsoft is defending a £2.1 billion UK lawsuit over alleged overcharging for Windows Server on rival cloud platforms
- The claim represents nearly 60,000 British businesses using non Microsoft cloud services
- Lawyers argue Microsoft used pricing and performance differences to steer customers toward Azure
- The tribunal is deciding whether the case can proceed as a collective action
Microsoft is confronting one of the most consequential legal challenges it has faced in the United Kingdom, as it defends itself against allegations that it unfairly charged British businesses billions of pounds for using its Windows Server software on rival cloud platforms.
At the centre of the case is a claim worth £2.1 billion, brought on behalf of nearly 60,000 UK businesses, which accuses Microsoft of abusing its market dominance by making Windows Server significantly more expensive when used on competing cloud services rather than on its own Azure platform.
The case reached a critical early stage this week at London’s Competition Appeal Tribunal, where judges are deciding whether the lawsuit can proceed as a collective action. While this hearing does not determine guilt or liability, its outcome will shape whether the case moves forward at all.
Allegations of Unequal Pricing and Market Pressure
The lawsuit argues that Microsoft systematically charged higher licensing fees to companies that chose to run Windows Server on third party cloud platforms such as those operated by Amazon, Google, and Alibaba.
According to the claim, these pricing differences effectively nudged customers toward Microsoft’s own Azure service by making alternatives artificially more expensive.
The case is being led by competition lawyer Maria Luisa Stasi, who contends that Microsoft’s licensing structure penalises businesses for using rival cloud providers. The claim asserts that companies were left with little real choice, either absorb higher costs or migrate workloads to Azure to remain competitive.
Lawyers for the claimants also allege that Microsoft intentionally reduced the performance and functionality of Windows Server when deployed on non Microsoft clouds. They argue this was not accidental or technical in nature, but part of a broader strategy designed to entrench Microsoft’s position in the rapidly expanding cloud computing market.
In court, Microsoft’s behaviour was described as a coordinated approach that leverages its longstanding dominance in enterprise software to shape customer decisions in the cloud infrastructure space.
Microsoft Pushes Back on Legal and Economic Grounds
Microsoft strongly rejects the accusations and is urging the tribunal to dismiss the case at this preliminary stage. Its legal team argues that the claim lacks a clear and workable methodology for calculating damages, which is a key requirement for certification as a collective action.
The company maintains that its business model, in which it both operates a cloud platform and licenses software to competitors, is lawful and can promote competition rather than restrict it. Microsoft says customers benefit from innovation, integration, and a wide range of cloud choices, insisting that the market remains highly competitive.
Microsoft has also argued that differences in pricing reflect legitimate commercial decisions rather than abuse of dominance. According to the company, licensing terms vary for many reasons, including technical support, security, and integration costs.
The tribunal will now assess whether the case presents a credible framework for examining alleged harm and whether it is suitable to proceed on behalf of tens of thousands of businesses.
Regulatory Scrutiny Extends Beyond the Courtroom
The lawsuit unfolds against a backdrop of growing regulatory attention on cloud computing practices across the UK, Europe, and the United States. Competition authorities have increasingly focused on how major technology firms use software licensing, data portability, and pricing structures to influence customer behaviour.
Earlier this year, a panel from the UK Competition and Markets Authority concluded that Microsoft’s licensing arrangements placed rival cloud providers at a material disadvantage. That finding, while separate from the lawsuit, has added weight to broader concerns about fairness and competition in the sector.
Microsoft responded at the time by emphasising the pace of innovation and investment in cloud services, arguing that customers are not locked in and that the market remains dynamic.
If the tribunal allows the lawsuit to proceed, it could become one of the most significant competition cases in the UK technology sector, with potential implications for how enterprise software is licensed across global cloud platforms.
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