Google accuses Microsoft of unfair practices in Azure cloud unit
Google Cloud CEO Thomas Kurian speaks at the Google Cloud Next event in San Francisco, April 9, 2019.
Michael Short | Bloomberg | Getty Images
Google, which has spent years defending itself against claims of monopolistic behavior across the U.S. and Europe, is going public with its own complaint of anti-competitive practices by longtime rival Microsoft.
In a letter to the Federal Trade Commission on Wednesday, Google alleged Microsoft uses unfair licensing terms to “lock in clients” to exert control over the cloud-computing market.
The letter was sent in response to a broad FTC request for comment on potential anti-competitive acts in the cloud industry. A spokesperson for the FTC declined to comment further.
Google singled out Microsoft in the complaint, arguing that through its dominant Windows Server and Microsoft Offices products, the company can make it difficult for its massive roster of clients to use anything but its Azure cloud infrastructure offering. Google described Microsoft’s licensing restrictions as a “complex web” that prevents businesses from diversifying their enterprise software vendors.
Google also said such control represents a significant national security and cybersecurity risk. It highlighted successive cyberattacks involving Microsoft products, including the SolarWinds breach. Microsoft and Google both have active cybersecurity practices that respond to and research cyber threats.
Google is no stranger to antitrust concerns. In January, the U.S. Department of Justice filed its second antitrust lawsuit against Google in just over two years, targeting its advertising business.
The department’s earlier lawsuit, filed in October 2020 under the Trump administration, accused Google of using monopoly power to cut off competition for internet search through exclusionary agreements. That case is expected to go to trial in September.
Google also faces three other antitrust lawsuits from large groups of state attorneys general, including one focused on its advertising business led by Texas Attorney General Ken Paxton.
In its FTC letter, Microsoft also alleged Oracle’s practices are harmful to customers.
“With overly complex agreements that seek to lock in clients to their ecosystems,” Google said, companies such as Microsoft and Oracle “are not only forcing customers toward a monolithic cloud model but also limiting choice, increasing costs for customers, and disrupting growing and thriving digital ecosystems in the U.S. and around the world.”
In the 1990s, Microsoft was involved in one of the most notorious antitrust cases in U.S. history. The company was accused of using its dominance in desktop software to push consumers to its internet browser, killing off competition from upstarts such as Netscape. The government won the case, ultimately forcing Microsoft to allow PC makers to use other companies’ browsers.
Technology
Spotify says it paid nearly 1,500 artists $1 million or more in royalties for 2024 streams
Reddit CEO Steve Huffman stands on the floor of the New York Stock Exchange (NYSE) after ringing a bell on the floor setting the share price at $47 in its initial public offering (IPO) on March 21, 2024 in New York City.
Spencer Platt | Getty Images News | Getty Images
Reddit shares rose more than 10% on Tuesday, reversing a three-day slump that coincided with a broader decline among technology companies.
Despite Tuesday’s gains, Reddit shares are still roughly 30% below the close on Wednesday.
Reddit’s stock market upswing was likely bolstered by a Loop Capital analyst note published Tuesday that reiterated a buy rating and characterized the company’s shares as “extremely attractive.” The analyst note said that Reddit’s 50% drop on Wall Street in the past month “is excessive,” and that the social media company “has the biggest upside potential relative to Street estimates in our coverage universe.”
The company’s shares dropped more than 15% in February after the company reported weaker-than-expected fourth-quarter user numbers as a result of a Google search change that temporarily hurt its search-derived traffic. Although Reddit said at the time that it had recovered from the algorithmic shift, the user number miss spooked investors.
Reddit’s shares have since spiraled downward along with other tech companies like Apple, Nvidia and Tesla off of concerns related to President Donald Trump‘s tariffs and growing fears of a recession. The seven most valuable tech companies lost more than $750 billion in market value on Monday with Nasdaq experiencing its biggest decline since 2022.
Loop Capital managing director Alan Gould acknowledged in the note that investors are operating in a “risk-off market environment,” but he contended that Reddit “has been one of the top performing stocks over the past year,” aside from its most recent dip.
“RDDT wildly exceeded ours and Street estimates for 2024, which explains why the stock increased almost 7-fold from a $34 IPO price to a peak of $230 in less than a year,” Gould wrote, noting Reddit’s growing revenue and improved advertising tools, among other positive developments.
Reddit’s fourth-quarter sales grew 71% year over year to $428 million, which represents the fastest growth rate for any quarter since 2022.
“In our view, RDDT deserves the revaluation it had experiencing based on the growth it has shown in the recent earnings reports and future projected growth driven by the ability to narrow the ARPU gap, and data licensing possibilities,” Gould wrote.
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