Google's $470 Million Offer to EU Regulators Aimed at Derailing Microsoft's Antitrust Deal

Google Dangled €470M to Foil Microsoft EU Cloud Pact

CISPE rejected Google's package to keep its EU case, eventually reaching an antitrust settlement with Microsoft. (Bloomberg) -- Google offered a group of European Union-based cloud firms a package worth about €470 million ($512 million) in a failed attempt to derail their antitrust settlement with Microsoft Corp. that freed the US software giant from a potentially costly EU case. Cloud Infrastructure Services Providers in Europe, or CISPE, last week ditched a complaint at the EU's antitrust arm over Microsoft's software licensing processes after brokering a deal to get fairer access to the US firm's technologies. CISPE had previously argued Microsoft made it too difficult for customers to change cloud providers by tying its business software to its Azure cloud services. But just 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 and people familiar with the matter, who spoke on condition of anonymity. The package totaled approximately €455 million worth of software licenses for Google's cloud technology over 5 years as well as €14 million in cash, as part of a long-term partnership proposal with the Mountain View, California-headquartered firm, according to the documents. Google's offer was conditional on CISPE maintaining its EU antitrust complaint into Microsoft's allegedly abusive activities, and was also boosted by about €6 million in financial contributions from Amazon Web Services, as part of its ongoing partnership with the association, the people said. Related:Microsoft Dodges EU Antitrust Probe in Deal with Cloud Lobby But the offer didn't sway CISPE's membership, which includes a swathe of European firms. Instead, they opted to take up an offer allowing them to use enhanced Microsoft Azure features -- with service providers permitted to offer Microsoft applications and services on their local cloud infrastructures. People familiar with the agreement said that Microsoft's offer also comes with a financial contribution of €10 million. "AWS is a founding member of CISPE and has regularly made voluntary contributions to CISPE," AWS said. "Enterprises across every major industry have long supported trade associations in similar ways." While Google has long trailed Amazon.com Inc. and Microsoft in the cloud market, it's begun to see impressive results. After breaking even for the first time last year, Google's cloud operation posted first-quarter profit of $900 million -- well ahead of analysts' projections of $672.4 million. Google's cloud unit is viewed as one of the firm's best bets for growth as its core search advertising business matures. Related:AWS, Azure, and GCP: 4 Major Areas in Which They Differ Its performance could be further boosted by increasing regulatory scrutiny into Microsoft's activities. EU probes can lead to fines as high as 10% of global sales if regulators find proof of competition abuses -- increasing the incentive on firms to settle with complainants. A Google spokesperson said that it has long supported the principles of fair software licensing and that the firm 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 they refused to confirm any of the terms of the deal. Microsoft pointed toward an earlier statement from its President Brad Smith, in which he said the company was pleased to have resolved EU antitrust concerns. Microsoft has a history of sidestepping antitrust scrutiny by brokering deals with complainants. In 2004, it handed over $9.75 million to a Google-backed group -- the Computer and Communications Industry Association, in order for it to drop a complaint into Microsoft's practices before EU regulators. In April 2021, CISPE published a paper calling on Microsoft to allow its customers to use software like Office on a wider range of cloud providers. It ramped up the pressure the following year, filing an antitrust complaint against Microsoft with Europe's top competition regulator, alleging it had made it difficult for customers to change their cloud providers by tying its business software to its cloud. While the cloud settlement removes one legal headache for Redmond, Washington-based Microsoft, it's still in the EU's cross-hairs. Microsoft's $13 billion investment into OpenAI Inc. is coming under added scrutiny from Brussels antitrust watchdogs, who are quizzing rivals about the AI firm's exclusive use of Microsoft's cloud technology. It also risks a hefty EU fine after regulators accused the company of abusing its market power by bundling the Teams video-conferencing app to its other business software.

Google dangled €470 million to foil Microsoft EU cloud pact

(Bloomberg) -- Google offered a group of European Union-based cloud firms a package worth about €470 million (US$512 million) in a failed attempt to derail their antitrust settlement with Microsoft Corp. that freed the U.S. software giant from a potentially costly EU case. Cloud Infrastructure Services Providers in Europe, or CISPE, last week ditched a complaint at the EU's antitrust arm over Microsoft's software licensing processes after brokering a deal to get fairer access to the U.S. firm's technologies. CISPE had previously argued Microsoft made it too difficult for customers to change cloud providers by tying its business software to its Azure cloud services. But just 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 and people familiar with the matter, who spoke on condition of anonymity. The package totaled approximately €455 million worth of software licenses for Google's cloud technology over 5 years as well as €14 million in cash, as part of a long-term partnership proposal with the Mountain View, California-headquartered firm, according to the documents. Google's offer was conditional on CISPE maintaining its EU antitrust complaint into Microsoft's allegedly abusive activities, and was also boosted by about €6 million in financial contributions from Amazon Web Services, as part of its ongoing partnership with the association, the people said. But the offer didn't sway CISPE's membership, which includes a swathe of European firms. Instead, they opted to take up an offer allowing them to use enhanced Microsoft Azure features -- with service providers permitted to offer Microsoft applications and services on their local cloud infrastructures. People familiar with the agreement said that Microsoft's offer also comes with a financial contribution of €10 million. "AWS is a founding member of CISPE and has regularly made voluntary contributions to CISPE," AWS said. "Enterprises across every major industry have long supported trade associations in similar ways." While Google has long trailed Amazon.com Inc. and Microsoft in the cloud market, it's begun to see impressive results. After breaking even for the first time last year, Google's cloud operation posted first-quarter profit of $900 million -- well ahead of analysts' projections of $672.4 million. Google's cloud unit is viewed as one of the firm's best bets for growth as its core search advertising business matures. Its performance could be further boosted by increasing regulatory scrutiny into Microsoft's activities. EU probes can lead to fines as high as 10 per cent of global sales if regulators find proof of competition abuses -- increasing the incentive on firms to settle with complainants. A Google spokesperson said that it has long supported the principles of fair software licensing and that the firm 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 they refused to confirm any of the terms of the deal. Microsoft pointed toward an earlier statement from its President Brad Smith, in which he said the company was pleased to have resolved EU antitrust concerns. Microsoft has a history of sidestepping antitrust scrutiny by brokering deals with complainants. In 2004, it handed over $9.75 million to a Google-backed group -- the Computer and Communications Industry Association, in order for it to drop a complaint into Microsoft's practices before EU regulators. In April 2021, CISPE published a paper calling on Microsoft to allow its customers to use software like Office on a wider range of cloud providers. It ramped up the pressure the following year, filing an antitrust complaint against Microsoft with Europe's top competition regulator, alleging it had made it difficult for customers to change their cloud providers by tying its business software to its cloud. While the cloud settlement removes one legal headache for Redmond, Washington-based Microsoft, it's still in the EU's cross-hairs. Microsoft $13 billion investment into OpenAI Inc. is coming under added scrutiny from Brussels antitrust watchdogs, who are quizzing rivals about the AI firm's exclusive use of Microsoft's cloud technology. It also risks a hefty EU fine after regulators accused the company of abusing its market power by bundling the Teams video-conferencing app to its other business software.

How Google may have given counteroffer to EU to 'penalise' Microsoft - Times of India

Microsoft recently reached a deal with a cloud services organisation (CISPE) to resolve an antitrust complaint over licensing practices. This agreement avoids a potential European Union investigation and hefty fine. The deal reportedly totals around 20 million euros, but excludes major players like Amazon Web Services (AWS) and Google Cloud Platform.For context, CISPE, representing companies like Amazon and smaller European cloud providers, had filed the complaint against Microsoft in 2022 to the European Commission. They argued that Microsoft's licensing terms were harming the European cloud computing market. Both Google and Amazon slammed CISPE's deal with Microsoft. Amazon said that AWS remains committed to fighting for fair practices for all customers, while Google said that it hopes regulators elsewhere will examine Microsoft's licensing. Now a new report in Bloomberg claims that Google offered a hefty package to CISPE in an attempt to derail their antitrust settlement with Microsoft. According to the Bloomberg report, "Google offered a group of European Union-based cloud firms a package worth about €470 million ($512 million) in a failed attempt to derail their antitrust settlement with Microsoft Corp that freed the US software giant from a potentially costly EU case." Just days before the agreement was announced, Google reportedly made a counteroffer designed to convince CISPE to maintain their EU complaint against Microsoft, according to confidential documents seen by Bloomberg and people familiar with the matter, who reportedly spoke on condition of anonymity. Google reportedly offered CISPE a $512 million package, including: * €455 million worth of software licences for Google Cloud over five years * €14 million in cash * A long-term partnership proposal The offer was contingent on CISPE maintaining its antitrust complaint against Microsoft. Additionally, Amazon Web Services (AWS) reportedly contributed €6 million to support CISPE's decision. However, CISPE ultimately decided to go with Microsoft's offer, which included: * Access to enhanced Microsoft Azure features * Permission for service providers to offer Microsoft applications and services on their local cloud infrastructure * A reported €10 million financial contribution from Microsoft The TOI Tech Desk is a dedicated team of journalists committed to delivering the latest and most relevant news from the world of technology to readers of The Times of India. TOI Tech Desk's news coverage spans a wide spectrum across gadget launches, gadget reviews, trends, in-depth analysis, exclusive reports and breaking stories that impact technology and the digital universe. Be it how-tos or the latest happenings in AI, cybersecurity, personal gadgets, platforms like WhatsApp, Instagram, Facebook and more; TOI Tech Desk brings the news with accuracy and authenticity.