UK tribunal clears £2B collective case over Microsoft Cloud fees

The UK Competition Appeal Tribunal has approved an opt-out collective action seeking about £2 billion from Microsoft over alleged overcharges on Windows Server licenses used on rival cloud platforms by nearly 60,000 UK businesses.

The order grants a Collective Proceedings Order, allowing eligible organizations across the UK to be included unless they opt out. The claim, brought by competition lawyer Maria Luisa Stasi with law firm Scott+Scott, contends that Microsoft used software licensing to favor its Azure cloud, increasing costs for customers who chose Amazon Web Services, Google Cloud Platform, or Alibaba Cloud.

According to the filing, Microsoft imposed higher fees when Windows Server ran on non-Azure infrastructure. It also alleges that customers using the Services Provider License Agreement, a program for third-party hosts, received less favorable terms and service quality than under Azure agreements, affecting entities in both the public and private sectors.

In its certification decision, the Tribunal rejected Microsoft’s opposition and wrote that the case “comfortably crosses the hurdle of having a real prospect of success.” Opt-out certification allows the case to proceed without individual filings by each claimant.

“Today’s ruling is an important moment for the thousands of organizations impacted by Microsoft’s conduct and in ensuring that a critical sector of the economy is innovative and open,” according to Stasi. “For years, Microsoft’s practices have had real financial impact on both public and private organizations. I’m now looking forward to preparing for trial and getting their money back on their behalf.”

Scott+Scott partner James Hain-Cole welcomed the ruling, noting, “We are very pleased with the Tribunal’s decision, including its confirmation that Dr Stasi’s action should proceed on an opt-out basis, as sought in her application.”

Microsoft disputes the allegations, contending that its business model promotes competition in cloud services. The company intends to appeal the certification decision.

The case comes as Microsoft’s licensing faces wider scrutiny in the UK and Europe. The UK Competition and Markets Authority has said it plans to open a strategic market status investigation covering Microsoft 365 licensing. In the European Union, the European Commission last year opened a probe to assess whether Microsoft should be designated a gatekeeper for cloud services under the Digital Markets Act. Last summer, Microsoft resolved a related dispute with the Cloud Infrastructure Service Providers in Europe through a $22 million settlement. Authorities in Brazil, Switzerland, the United States, and Japan have also initiated inquiries into aspects of the company’s cloud and software licensing.

With certification in place, the parties are expected to begin case management and evidence gathering. A timetable for a hearing on the merits has not been set.