Microsoft has leveled serious accusations against Google, alleging that the search giant is orchestrating a “shadow campaign” to undermine Microsoft’s cloud business, Azure. In a scathing blog post, Microsoft’s deputy general counsel, Rima Alaily, revealed that Google is on the verge of launching a new lobbying group designed to discredit Azure.
According to Microsoft, Google has hired a European lobbying firm to establish this new organization, which is set to be unveiled this week. The software giant claims to have learned of this campaign through an unnamed European cloud provider who declined to participate and subsequently alerted Microsoft.
This latest development comes shortly after Google filed an antitrust complaint against Microsoft with EU regulators in September. In its complaint, Google accused Microsoft of unfair licensing practices for Azure. This move followed Microsoft’s settlement with CISPE, a group of European cloud infrastructure providers who had previously raised similar concerns about Microsoft’s licensing terms.
Microsoft alleges that Google actively attempted to thwart its settlement with CISPE in July. The company suggests that this recent escalation of hostilities between the two tech giants may signal a return to the intense rivalry that characterized their past interactions, reminiscent of the “Scroogled” campaign and disputes over Google services on Windows Phone.
Here’s the complete blog post written by Rima Alaily, CVP, Deputy General Counsel, Microsoft
Since moving into my current role at Microsoft almost seven years ago, I’ve worked hard to be genuine, responsive, and transparent. I’ve taken pains to tell the truth, even when that might make things more complicated for Microsoft. I think, and hope people I’ve engaged with – including reporters, and regulators – would say the same. It’s not comfortable or natural for me to pen something critical of someone else, but in this case, I think it’s important because it concerns me when someone attacks us and, I believe, does so dishonestly.
This week an astroturf group organized by Google is launching. It is designed to discredit Microsoft with competition authorities, and policymakers and mislead the public. Google has gone through great lengths to obfuscate its involvement, funding, and control, most notably by recruiting a handful of European cloud providers, to serve as the public face of the new organization. When the group launches, Google, we understand, will likely present itself as a backseat member rather than its leader. It remains to be seen what Google offered smaller companies to join, either in terms of cash or discounts.
This latest effort comes on the heels of their recent failure to weaponize another organization – CISPE – against Microsoft. In July, when CISPE was on the verge of resolving its complaint against Microsoft, Google offered CISPE’s members a combination of cash and credits amounting to an eye-popping $500 million to reject the settlement and continue pursuing litigation. Wisely, they declined. And, instead, the CISPE members endorsed the resolution we had developed together.
Google’s tactics, unfortunately, go beyond creating astroturf lobbying organizations. They’re also speaking out in their own name in disingenuous ways and putting forward paid commentators to discredit us. Why? I suspect much has to do with the fact that Google is facing a reckoning. Never in the past two decades have Google’s search, digital advertising, and mobile app store monopolies faced such a concerted and determined threat as they do today. By our count, there are at least 24 antitrust investigations against Google in the leading digital markets around the world. At a time when Google should be focused on addressing legitimate questions about its business, it is instead turning its vast resources towards tearing down others. It is disappointing that, with the foundation of their business facing jeopardy, they have sought to bolster their cloud computing service – Google Cloud Platform – by attacking ours.
It seems Google has two ultimate goals in its astroturfing efforts: distract from the intense regulatory scrutiny Google is facing around the world by discrediting Microsoft and tilt the regulatory landscape in favor of its cloud services rather than competing on the merits.
Google’s new European astroturf lobbying organization
We recently learned that, following its rejection by CISPE, Google pivoted to stand up its own astroturf lobbying organization. It hired a lobbying and communications agency in Europe to create and operate the organization. And it recruited several small European cloud providers to join. One of the companies approached, who ultimately declined, told us that the organization will be directed and largely funded by Google for the purpose of attacking Microsoft’s cloud computing business in the European Union and the United Kingdom. Of course, the innocuous recruitment document omits any mention of Google’s involvement and the actual purpose of the organization. We have been informed that the organization will be led by Nicky Stewart, who personally penned complaints against Microsoft and Amazon Web Services (AWS) in the UK Competition and Market Authority’s ongoing investigation into the cloud computing market.
In September, Google took an unusual step and publicly announced that it had filed a formal complaint concerning Microsoft’s software licensing practices for the cloud with the European Commission. Most such complaints are submitted confidentially, but Google took the opportunity to broadcast its concerns. Although it suggests that Google is acting to protect the interests of European customers, its complaint reads differently. Fundamentally, Google’s argument is that it should not have to pay Microsoft when it builds and offers cloud services using our intellectual property – namely Windows Server – if customers have otherwise purchased the same software for a very different use, i.e., on their own server. We disagree. When a streaming service, like Netflix or Disney, includes a movie in their service, they pay for that right. They don’t get a credit or discount if a subscriber happens to own a DVD of the same movie. Software and the cloud are no different.
Google is also continuing, directly and through proxies, to lobby competition authorities around the world to intervene and impose restrictions on its hyperscale cloud competitors, but not itself. Google argues that it should be treated as a non-hyperscale or small cloud provider; in effect, it asserts that it is not in the same category as AWS and Microsoft. This strains credibility. Google may have been late in meeting the needs of enterprise customers, but it is fully capable of competing head-to-head with AWS and Microsoft. It does not need competition authorities to put a thumb on the scale in its favor. Google is a leader in datacenter capacity, with an operational capacity of 3,500 MW in 2023, more than any other provider. As one of the world’s most valuable companies, last quarter it achieved 29% growth rate in its cloud business and invested $13 billion to grow its infrastructure. We hope Google does not prevail in misleading competition authorities, because the companies with most to lose from this would be every other non-hyperscale cloud provider across the globe and the customers we all serve.
Google’s pattern of shadowy campaigns
In Europe and in the U.S., Google has taken a page out of its decades-long playbook for litigating against antitrust enforcers. It is funding – directly and indirectly – various industry commentators and academics to attack Microsoft and author “studies” that can be cited to discredit us. Assistant Attorney General Jonathan Kanter at the United States Department of Justice recently condemned tactics like these as undermining true expertise and antitrust enforcement. Indeed, these commentators often misrepresent their credentials or mask their affiliation with to appear as neutral experts.
Just recently one of these commentators published an op-ed calling for regulatory intervention and echoing Google’s arguments, citing past ties to Microsoft and Google, perhaps to seem impartial. We took note, since we had not worked with the author for many years and had no current relationship. After we raised the issue with the publication, it updated the article to properly disclose the author’s affiliation with a private consulting firm which has counted Google as a client.
Europe is not the only jurisdiction where Google is engaged in these tactics, nor is software licensing for the cloud the only topic Google is using to attack us behind the scenes.
We understand Google is a main funder of the U.S.-based Coalition for Fair Software Licensing, which has levied attacks on our cloud computing business in the United States, the United Kingdom, and the EU. The organization is run by a well-known lobbyist for Google in Washington DC, but Google’s affiliation isn’t disclosed publicly by the organization.
Google has also attacked us on topics ranging from cybersecurity to our business in China, pitching stories to reporters, suggesting questions to congressional offices ahead of hearings, and distributing documents in major capitals around the world. Earlier this year, Google distributed a “fact sheet” in Washington DC attempting to drum up concerns about our approach to the Chinese market. The document is misleading and filled with inaccuracies, which we attempted to raise directly with Google leadership with no resolution.
Google’s work on this range of topics underscores the fact that it is less concerned about Microsoft’s conduct in the cloud market than it is with discrediting a competitor wherever it can get a foothold.
Microsoft’s approach
We are always listening when it comes to our products, licensing, and business strategy, which is why we try to respond to genuine feedback from customers, partners, and regulators and make swift changes.
This was the basis of our offer to CISPE members. Having previously agreed to collaborate on a technology solution to address market challenges they faced. It was logical at the time – and continues to be – that we did not make the same changes for hyperscale providers like Google and Amazon who are very differently situated in the marketplace.
This was also the basis of the changes we proactively made to our popular business and enterprise productivity suites last year: creating versions without Teams – at a lower price – to expand choice given the concerns raised by the European Commission.
We’ve made these changes, and others, not because we believed we were doing something improper but because we understand that the role and responsibility that we have as an important global technology company and the heightened expectations that governments, regulators, policymakers, customers and partners have of us.
We will continue to listen and evolve when we hear credible, legitimate, and addressable concerns, but as Google continues to demonstrate with its actions, the arguments it wants you to believe are none of these.