Google offers smaller cloud firms €470 million to derail Microsoft antitrust settlement

Offer rebuffed and Microsoft off the hook for one antitrust action – for now

Google offered a group of European Union-based cloud firms a package worth about €470 millionin a failed attempt to persuade them not to settle their antitrust action against Microsoft.

Bloomberg has reported that Google made the failed bid, days before the deal was annouced.

Cloud Infrastructure Services Provers in Europe (CISPE) announced last week that it had reached an agreement with Microsoft regarding software licencing processes. The group of smaller cloud companies has withdrawn a request for the EU Commission to investigate Microsoft's cloud licencing agreements.

AWS is part of CISPE but not covered by this settlement.

CISPE had been arguing that by tying O365 and Teams to Azure cloud services it made it unfeasibly difficult for customers to switch cloud providers and still keep their Microsoft enterprise apps.

However, days before the agreement was announced, Alphabet Inc. unit Google made a counteroffer designed to convince CISPE to maintain their EU complaint, according to confidential documents seen by Bloomberg.

The package added up to approximately €455 million worth of software licenses for Google's cloud technology over 5 years, in addition to €14 million in cash according to the documents.

A Google spokesperson said that the company supported the principles of fair software licensing and that it was having discussions about joining CISPE, to fight anticompetitive licensing practices.

A CISPE spokesperson said the association's members were presented with alternative options to accepting the Microsoft deal but refused to confirm any of the terms.

The terms of the deal between Microsoft and CISPE includes a collaboration between all the parties to release an "enhanced version of Azure Stack HCI" for European cloud providers, which will offer features such as multi-session virtual desktop infrastructure based on Windows 11, free Extended Security Updates (ESU) and pay-as-you-go licensing for SQL Server.

Francisco Mingorance, Secretary General, CISPE, said in a statement last week:

"This is a significant victory for European cloud providers. CISPE has given Microsoft the benefit of the doubt and believes that this agreement will provide a level playing field for European cloud infrastructure service providers and their customers. Microsoft has nine-months to make good on its commitment by offering solutions that allow fair licensing terms for its productivity software European cloud infrastructures."

The settlement, which has reportedly cost Microsoft €20m, takes away one of the antitrust challenges facing Microsoft, but the ginat remains under scrutiny in the EU.

It announced that it would unbundle Teams from Microsoft Office in the EU last Autumn in what was viewed as an attempt to beat regulators to the punch, and took the same model global earlier this year. Whether this action heads off another large fine remains to be seen.

Microsoft $13 billion investment into OpenAI Inc. is also coming under scrutiny.