EU cloud companies demand safeguards against software license abuse

A group of providers are calling for the European Commission to extend the Digital Markets Act to also cover the cloud.

European cloud computing companies are in an uproar over what they see as a “critical loophole” in the EU’s plan to tackle anti-competitive behavior in the digital marketplace.

Forty one cloud executives have signed an open letter sent to competition commissioner and EVP Margrethe Vestager this week. These cloud enterprises want an important additional clarification in the draft Digital Markets Act (DMA) legislation. Specifically, they want to ensure that productivity and enterprise software fall clearly into the law’s scope.

The signatories to the letter range in size from startups to larger enterprises. Companies that have signed include Aruba, elogic, Leaseweb and netalia.

Time is of the essence, the cloud companies claim

“We have a fast-closing window of opportunity to preserve an autonomous European cloud infrastructure
sector.,” the letter reads. “The Digital Markets Act (DMA) could quickly ensure that the European cloud market is free, open and competitive. Unfortunately, the current version of the DMA requires clarification to ensure that its
remedies also apply to unfair software practices by gatekeepers with dominant positions in productivity
and enterprise software.”

In 2020, the European Commission recently unveiled its DMA proposal to apply ex ante rules to so-called digital “gatekeepers”. These are the large intermediating platforms with significant market power. The EC promised the legislation would put specific, listed behavioural obligations on major platforms to supplement traditional (ex post) competition enforcement. It would do this by proactively prohibiting abusive behaviors such as self preferencing or anti-interoperability.

However, the European cloud companies penning the letter to Vestager worry that the language and examples are not explicit enough to ensure legal clarity for their sector. “Without clarification in the DMA, the result will be the continuation of the unfair practices of monopoly software gatekeepers,” the letter claims.

The cloud execs close with a dire prediction. “We cannot wait for a revision of the DMA in five years, nor for a pyrrhic victory in antitrust litigations in 10 years or more when the competitiveness of the market will not be recoverable,” they warn.