Amazon is reportedly leading lobbying groups in Europe and the United States that are curbing Microsoft’s cloud ambitions. Bloomberg sources claim that the three groups are making decisions that strongly favour AWS.
Bloomberg bases this conclusion on anonymous sources, tax returns and other documents. The groups are said to be aggressively pushing policymakers to keep popular Microsoft products available in as many cloud environments as possible. According to the lobbyists, Microsoft is already creating vendor lock-in with customers.
The groups in question are the Cloud Infrastructure Providers in Europe (CISPE), the Coalition for Fair Software Licensing (CFSL) and the Alliance for Digital Innovation (ADI). While Amazon is far from the only participant in these collectives, it is said to provide “specific initiatives” with funding on top of significant annual contributions. For example, Amazon pays about $30,000 a year to CISPE alone.
Microsoft has 80 percent of U.S. government workers working with its Office suite. However, according to Gartner, AWS does have nearly twice the market share of Microsoft in the public cloud market, which is in second place with Azure: 40 percent versus 21.5 worldwide across 2022. However, this market is gradually shifting away from AWS.
Since 2016, competitors, customers and policymakers have complained about Microsoft’s anti-competitive behavior in the cloud market. Applications from the company are said to be much harder to run on platforms other than Azure. Because it would often be a hell of a job to change contracts, government agencies in Europe and the US are mostly stuck with Azure (vendor lock-in).
Successes of the lobby groups
In several cases, Amazon’s tactics paid off. For example, the CFSL managed to convince the U.S. Federal Trade Commission (FTC) to investigate Microsoft’s software licensing practices. Also in Europe, Amazon, through CISPE, reportedly attacked Microsoft’s allegedly anti-competitive stance with a white paper in April 2021. This was followed up a year later with an official complaint to the European competition authorities. In April 2023, the case was settled in favour of CISPE’s allegations, after which Microsoft committed to making the switch to another cloud vendor easier.
No list of members of the CFSL is known, but two Bloomberg sources state that Amazon is a major backer of the group and strongly influences its positions. In conversation with The Register, the CFSL states that it does not discuss specific members. However, that British news site had already highlighted AWS’s membership on several occasions earlier in the year.
AWS is not the only party with practices like this on it. Both Microsoft and Google make a case for their own interests in similar ways, with lobby groups seeking audiences in Washington DC and Brussels. However, the lead in the cloud market is still firmly in the hands of AWS. Microsoft’s questionable software licensing practices for other clouds has allowed AWS to keep the competition at bay by legal means. In essence, it’s targeting a key selling point for Azure, guarding against Microsoft’s cloud ambitions by reducing its effectiveness.
The big cloud players will be all too aware that AI could become a new front in the battle for the cloud. While policymakers are still busy regulating, executives are already convinced that AI applications are going to shake up the job market significantly.
What does this have to do with the cloud market? As for Microsoft, it is now clear how it wants to provide AI solutions: with Copilots for virtually any profession, powered by cloud compute. Ideally, Microsoft would like to do so with proprietary hardware. That means a new opportunity to integrate applications within its Azure cloud, perhaps in a way that works better for customers than it would ever do elsewhere. Regardless, the Office suite and Windows are still means for Microsoft to engage customers, albeit within legal frameworks.
Also read: AWS offers GPU power for short AI workloads