Ofcom said it received evidence showing Microsoft makes it less attractive for customers to run its Office productivity apps on cloud infrastructure other than Microsoft Azure.
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Microsoft was accused Friday of abusing the dominance of its Azure cloud computing unit to squeeze a — and, in some cases, evaporate — the profit margins of rival cloud platforms in Europe.
The claim came in a complaint from CISPE, a trade body for “infrastructure as a service” cloud firms in Europe. It also comes as the Redmond, Washington-based technology giant is facing intense scrutiny over its cloud computing and software licensing practices in the European Union, as well as the U.K.and U.S.
The allegations stem from tweaks Microsoft made to its licensing terms in 2019. Under those rules, Microsoft required firms to purchase a Software Assurance license and “mobility rights” if they wanted to deploy their Microsoft software on hosted cloud services offered by rival providers.
Customers also couldn’t rely on perpetual licenses they had already purchased to run Microsoft applications on so-called “listed providers” like Alibaba, Amazon, Google, and Microsoft itself. They’d have to buy new licenses, instead. Meanwhile, some software, including Office 365 Windows Apps, was forbidden from running on rival clouds.
The terms are the source of intense anger from competing cloud firms in Europe, like France’s OVHCloud and Italy’s Aruba, as well as Big Tech competitor Amazon. It also formed the basis of an investigation from the European Commission seeking to determine whether Microsoft’s cloud practices are anti-competitive.
Microsoft declined to comment when contacted by CNBC. In 2022, Microsoft President Brad Smith wrote a blogpost saying it was revising its licensing deals and making it easier for cloud providers to compete.
In its complaint Friday, CISPE — which is heavily funded by Amazon — showed an example in its research where one member cloud firm, the name of which was not disclosed, saw revenues from selling Microsoft products including Windows Server, and SQL Server services climb over 300% since 2018, contributing to Microsoft’s own growth.
But the growth of the unnamed cloud vendor’s profit margins didn’t match Microsoft’s, and in fact the competing cloud vendor saw their margins fall from a positive mid-twenties percentage in 2018 to double-digit negative profit margins in 2023.
The biggest decline in profit margins for this cloud firm occurred in 2019, the same year Microsoft changed its licensing terms to favor licensing software on Azure, the CISPE said. From 2019 to 2020, the CISPE member concerned saw their margin collapse from over 20% to zero.
CISPE also said that members shared evidence that the price they were charged for Microsoft’s SQL Server was much higher than the price quoted by Microsoft for customers using Azure.
For example, a company licensing Microsoft’s software for hosting and delivering their applications would have to pay 612.27 euros ($670) per 2-core SQL Server Enterprise product, 92.01 euros more than what Microsoft charges customers using Azure on average (520.26 euros), according to the CISPE’s data.
The complaint and the findings add to previous research from Frederic Jenny, a professor of economics at ESSEC Business School in Paris who specializes in competition law, for CISPE. Jenny found that Microsoft effectively charges businesses a 28% “tax” to run its software products on competing cloud services.
The European Commission told CNBC: “The Commission has received several complaints regarding Microsoft, including in relation to its product Azure, which we are assessing based on our standard procedures. We have no further comment to make at this stage.”
The U.K.’s Competition and Markets Authority, which took charge from media and telecommunications regulator Ofcom for a probe into competition in the U.K. cloud computing market last year, was not immediately available for comment when contacted by CNBC.
White House Senior Advisor Elon Musk walks to the White House after landing in Marine One on the South Lawn with U.S. President Donald Trump (not pictured) on March 9, 2025 in Washington, DC.
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Tesla shares fell in premarket trade on Monday after CEO Elon Musk announced plans to form a new political party.
The stock was down 7.13% by 4:27 a.m. E.T.
Musk said over the weekend that the party would be called the “America Party” and could focus “on just 2 or 3 Senate seats and 8 to 10 House districts.” He suggested this would be “enough to serve as the deciding vote on contentious laws, ensuring that they serve the true will of the people.”
Now tech billionaire’s reinvolvement in the political arena is making investors nervous.
“Very simply Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take during this crucial period for the Tesla story,” Dan Ives, global head of technology research at Wedbush Securities, said in a note on Sunday.
“While the core Musk supporters will back Musk at every turn no matter what, there is broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track.”
Musk’s previous political foray earned him Trump’s praise in the early days, but he has since drawn the ire of the U.S. president.
The two have clashed over various areas of policy, including Trump’s spending bill which Musk has said would increase America’s debt burden. Musk has taken issue to particular cuts to tax credits and support for solar and wind energy and electric vehicles.
Trump on Sunday called Musk’s move to form a political party “ridiculous,” adding that the Tesla boss had gone “completely off the rails.”
Musk is contending with more than just political turmoil. Tesla reported a 14% year-on-year decline in car deliveries in the second quarter, missing expectations. The company is facing rising competition, especially in its key market, China.
Jonathan Ross, chief executive officer of Groq Inc., during the GenAI Summit in San Francisco, California, US, on Thursday, May 30, 2024.
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Artificial intelligence semiconductor startup Groq announced Monday it has established its first data center in Europe as it steps up its international expansion.
Groq, which is backed by investment arms of Samsung and Cisco, said the data center will be located in Helsinki, Finland and is in partnership with Equinix.
Groq is looking to take advantage of rising demand for AI services in Europe following other U.S. firms which have also ramped up investment in the region. The Nordics in particular is a popular location for the data facilities as the region has easy access to renewable energy and cooler climates. Last month, Nvidia CEO Jensen Huang was in Europe and signed several infrastructure deals, including data centers.
Groq, which is valued at $2.8 billion, designs a chip that the company calls a language processing unit (LPU). It is designed for inferencing rather training. Inferencing is when a pre-trained AI model interprets live data to come up with a result, much like the answers that are produced by popular chatbots.
While Nvidia has a stranglehold on the chips required for training huge AI models with its graphics processing units (GPUs), there is a swathe of startups hoping to take a slice of the pie when it comes to inferencing. SambaNova; Ampere, a company SoftBank is in the process of purchasing; Cerebras and Fractile, are all looking to join the AI inference race.
European politicians have been pushing the notion of sovereign AI — where data centers must be located in the region. Data centers that are located closer to users also help improve the speed of services.
Global data center builder Equinix connects different cloud providers together, such as Amazon Web Services and Google Cloud, making it easier for businesses to have multiple vendors. Groq’s LPUs will be installed inside the Equinix data center allowing businesses to access Groq’s inference capabilities via Equinix.
Groq currently has data centers in the U.S. and Canada and Saudi Arabia with its technology.
Don’t miss Groq CEO Jonathan Ross on Squawk Box Europe at 7:45 a.m. London time.
Hidden among the majestic canyons of the Utah desert, about 7 miles from the nearest town, is a small research facility meant to prepare humans for life on Mars.
The Mars Society, a nonprofit organization that runs the Mars Desert Research Station, or MDRS, invited CNBC to shadow one of its analog crews on a recent mission.
“MDRS is the best analog astronaut environment,” said Urban Koi, who served as health and safety officer for Crew 315. “The terrain is extremely similar to the Mars terrain and the protocols, research, science and engineering that occurs here is very similar to what we would do if we were to travel to Mars.”
SpaceX CEO and Mars advocate Elon Musk has said his company can get humans to Mars as early as 2029.
The 5-person Crew 315 spent two weeks living at the research station following the same procedures that they would on Mars.
David Laude, who served as the crew’s commander, described a typical day.
“So we all gather around by 7 a.m. around a common table in the upper deck and we have breakfast,” he said. “Around 8:00 we have our first meeting of the day where we plan out the day. And then in the morning, we usually have an EVA of two or three people and usually another one in the afternoon.”
An EVA refers to extravehicular activity. In NASA speak, EVAs refer to spacewalks, when astronauts leave the pressurized space station and must wear spacesuits to survive in space.
“I think the most challenging thing about these analog missions is just getting into a rhythm. … Although here the risk is lower, on Mars performing those daily tasks are what keeps us alive,” said Michael Andrews, the engineer for Crew 315.
