Long wait

However, Whelan’s paper suggests it could take up to nine months or more to confer SMS on Microsoft, and at least 18 months for any remedy imposed under DMCCA to take effect.

“Given the complexities involved in these novel legal processes, as well as the potential for drawn out implementation or trialing phases, it is very possible indeed that any remedy imposed under the DMCCA regime will only start to take effect more than a year and a half after the publication of the CMA’s final decision in its market investigation,” he wrote.

“The timescale would be even longer if, due to capacity constraints, for example, the CMA board did not initiate an SMS designation against Microsoft immediately following the publication of the Final decision report in the cloud services market investigation.”  

For this reason, Whelen goes on to advise the CMA to consider taking swifter and more direct action against Microsoft and its licensing techniques.

“It is axiomatic that a swift enforcement response to conduct that is harming competition can be vital for the effectiveness of a competition remedy, and particularly so with respect to digital markets.”

Citing an article from the European competition journal, entitled Strengthening effective antitrust enforcement in digital platform markets (2022), Whelan added: “In such fast-moving markets, ‘timely intervention is of the essence in preventing irreparable harm to competition’.”

The paper’s publication comes about a month before the CMA is expected to publish the final decision in its investigation into how well competition works in the UK cloud infrastructure services market, which began in October 2023.

The investigation itself was prompted by the outcome of a 12-month investigation by communications regulator Ofcom to assess how competitive the UK cloud market is – and establish who its major players are.

Partway through that investigation, which began in September 2022, Ofcom singled out the behaviour of AWS and Microsoft as being particularly problematic from a competition standpoint. And this, in turn, resulted in Ofcom referring the market over to the CMA for further investigation.

The CMA is far from the only regulator or party to have taken issue with Microsoft’s cloud licensing practices, as its cloud rival, Google, filed a complaint with the European Commission over its activities on this matter in September 2024.

Computer Weekly also reported last month that its habit of charging customers more for running its software in competitors’ cloud is the subject of a £2bn legal claim that has been filed with the UK Competition Appeal Tribunal.

Ryan Triplette, executive director of the Coalition for Fair Software Licensing, said her organisation supports the contents of Whelan’s paper, having also been another of the parties to have previously spoken out about Microsoft’s cloud licensing arrangements.

“The UK Competition and Markets Authority has made it clear that Microsoft uses its ‘significant market position’ in software products and services to restrict cloud choice, the impact of which is ultimately borne by the consumer – in higher costs, security vulnerabilities and taxpayer waste,” she said. “We urge the CMA ahead of its final decision to protect customers by taking strong, direct action against Microsoft to end its harmful software licensing practices.”