Google’s $500M Bid to Disrupt Microsoft’s EU Cloud Deal Falls Through, Report Reveals

In a significant move, Google attempted to obstruct a settlement between Microsoft and the European Union over anticompetitive software licensing. According to Bloomberg, Google proposed a $500 million alternative deal to a coalition of cloud providers backing the EU complaint against Microsoft.

Google's offer to the Cloud Infrastructure Services Providers in Europe (CISPE) hinged on the group maintaining its EU antitrust complaint. This proposition came just days before CISPE finalized its settlement with Microsoft, as reported by TechCrunch. Despite Google's substantial package, which included over five years of software licenses and approximately $15 million in cash, CISPE opted for Microsoft's deal.

Bloomberg's investigation, involving confidential documents and insider sources, revealed Google's attempt to influence CISPE. However, CISPE announced their agreement with Microsoft last week, thwarting Google's efforts.

CISPE had originally lodged its complaint in 2022, accusing Microsoft of harming the European cloud ecosystem and limiting customer choices by inflating costs for rival cloud services. In February, CISPE emphasized that any resolution should be sector-wide and publicly accessible.

The settlement, however, excluded major players like Amazon, a CISPE member, and Google, which is not. Despite CISPE's promises of transparency, the deal's specifics were only broadly outlined in a CISPE blog post.

The agreement's financial details remain unclear, though Reuters reported that Microsoft offered approximately $22 million to cover CISPE's legal fees. A CISPE spokesperson confirmed that alternative options to the Microsoft deal were presented, but the majority voted to accept Microsoft's offer, seeing it as the best opportunity for the European cloud sector.

Neither Microsoft nor Google directly commented on the counteroffer. A Google representative stated the company's commitment to fair software licensing principles and ongoing discussions about joining CISPE. Microsoft reiterated their satisfaction with the resolution.

For CISPE, this deal is seen as a step forward, allowing European cloud providers to offer Microsoft services on their local infrastructures. Despite this, Amazon and Google expressed dissatisfaction, with Google's platform head, Amit Zavery, criticizing the settlement as a "pay-off."

CISPE's agreement includes a nine-month compliance period for Microsoft, after which the complaint may be refiled if terms are not met. CISPE will also establish an independent European Cloud Observatory to monitor Microsoft's compliance, involving various stakeholders including Microsoft.

CISPE Secretary-General Francisco Mingorance hailed the deal as a victory for European cloud providers, though larger players like Amazon and Google remain critical. The Coalition for Fair Software's executive director, Ryan Triplette, also voiced concerns about the settlement's limited impact on Microsoft's global practices.

Google continues to advocate for regulatory scrutiny of Microsoft's actions in the cloud market, aiming for solutions that promote competition and innovation across the industry.