Microsoft's Business Practices in the Cloud: A Competitive Analysis

Independent analysis by Dr Aleksandra Boutin and Dr Xavier Boutin identifies Microsoft’s tactics that foreclose competitors and harm innovation, despite recent settlements. Findings are a “call to action” for regulators to end deliberate suppression of competition and long-term harm to customers in the European cloud markets .

Cloud computing is a key component of the digital sector. It is the underlying technology for the development and provision of modern digital products and services that are essential to the daily lives of people and businesses. However, the future development of the cloud is currently threatened by Microsoft, which leverages its super-dominant position in enterprise software to protect it and, at the same time, expand it into new markets.

This report has three main findings. First, Microsoft has all the necessary elements to anticompetitively foreclose competitors and harm customers in the cloud markets: technology, market power, business incentive and unique possession of a large mass of legacy customers. Second, Microsoft’s behaviour broadly harms consumers and competitors large and small. Third, Microsoft’s current anticompetitive activity in the cloud is not novel or unusual for Microsoft. It fits within Microsoft’s long-established playbook to foreclose competitors and control emerging markets early on, which regulators have studied and ruled against time and time again, for example, in the Windows Server and the Internet Explorer cases. The technology may be different, but the strategy—leveraging strength in one market to affect competition and foreclose competitors in another—is the same.

The research and analyses performed in preparing this paper were funded by Google.