Google spends $500 million to try to kill Microsoft's EU cloud deal, but fails: report

Google has offered a $500 million alternative to the group of cloud providers behind the EU complaint in an attempt to block an antitrust settlement with Microsoft over anti-competitive software licensing in the EU, Bloomberg reports.

According to Bloomberg, a proposal that Google presented to the Cloud Infrastructure Service Providers in Europe (CISPE) would have required the group to maintain its EU antitrust complaint. The proposal, which came “just days” before CISPE settled with Microsoft, was likely not convincing enough to stop CISPE from striking a deal with the software giant, with TechCrunch noting that CISPE was forced to accept some compromises.

Bloomberg uncovered Google's counteroffer after reviewing confidential documents and speaking to “people familiar with the matter.” Apparently, Google tried to woo CISPE with a package worth about $500 million, including software licenses over five years and about $15 million in cash.

But CISPE didn't take the bait, and last week announced that it had reached an agreement with Microsoft, seemingly frustrating Google.

CISPE first filed its complaint in 2022, alleging that Microsoft was “irreparably damaging the European cloud ecosystem and depriving European customers of cloud adoption options” by skyrocketing the cost of running its software on rival cloud services. In February, CISPE said “any remedies or solutions must be industry-wide and available to all European cloud customers.” It also promised that “any agreements will be made public.”

But the settlement reached last week does not include major rivals such as CISPE member Amazon or non-member Google, and despite CISPE's promises, the terms of the settlement have not been made public, beyond a blog post outlining key features that it claims address the group's concerns about Microsoft's anticompetitive behavior.

What's clear is that CISPE accepted the deal and agreed to drop the complaint, but no one knows exactly how much Microsoft paid to cover CISPE's legal costs over three years in a “lump sum,” TechCrunch notes, but “two people with direct knowledge of the matter” told Reuters that Microsoft offered about $22 million.

Google has been trying to catch up with Microsoft and Amazon in the cloud market and has only recently started to gain momentum. Last year, Google's cloud business turned a profit for the first time, and the company surprised with a $900 million profit in the first quarter of 2024, more than $200 million above analysts' expectations, Bloomberg reported. Bloomberg noted that the global cloud market has become a key growth area for Google as potential growth opportunities in search advertising slow. Appearing to increase regulatory pressure on Microsoft while acquiring much of its business in the EU was meant to be one of Google's next big moves.

“Members were presented with options other than accepting the Microsoft deal,” CISPE spokesman Ben Maynard told Ars, without disclosing the terms of those options. “However, members voted overwhelmingly to accept Microsoft's proposal, which in their view represents the best opportunity for the European cloud sector,” Maynard told Ars.

Neither Microsoft nor Google have commented directly on the reported counteroffer. A Google spokesperson told Bloomberg that Google “has long supported fair software licensing principles and is in discussions about joining CISPE to fight anticompetitive licensing practices.” A person familiar with the matter told Ars that Google did not necessarily make its counteroffer conditional on dropping its EU complaint, but that it has long considered joining CISPE and would only join if CISPE adheres to its mission of protecting fair licensing practices. Microsoft confirmed that it was “pleased” to resolve CISPE's antitrust complaint, reiterating previous statements by Microsoft president Brad Smith.

For CISPE, the solution may not have been perfect, but it “will allow European cloud providers to offer Microsoft applications and services on their own cloud infrastructure, fulfilling the demand for sovereign cloud solutions.” In 2022, CISPE Secretary General Francisco Mingorrance told Ars that CISPE had made clear its intention to force Microsoft to make changes to allow all cloud rivals to compete, but that “the main reason for filing the complaint” was to help two smaller cloud service providers, Aruba and OVH.

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