Microsoft Accused of Overcharging Customers in $1.27 Billion Lawsuit

Microsoft Azure has been accused of overcharging U.K. customers of rival cloud companies in a new £1.3 billion (US $1.27 billion) lawsuit.

The lawsuit alleges that Microsoft offers a cheaper price to companies running Windows Server on Azure than on direct competitors like AWS, Google Cloud or Alibaba Cloud. It argues that companies running the software are essentially being overcharged to use alternative cloud computing solutions, according to a CNBC report.

The lawsuit also contends that Microsoft leverages its dominant cloud market position to extract higher prices and induce customers into moving to Azure.

The case is being brought in the Competition Appeal Tribunal, a specialist judicial body. The claimant is competition lawyer Maria Luisa Stasi, who is head of law and policy for digital rights advocacy group Article19. Stasi is seeking more than £1 billion in compensation for firms affected.

Stasi represents the customers of Amazon, Google and Alibaba in the lawsuit but doesn’t represent any of these companies, her spokesperson told CNBC.

Maria Luisa Stasi

However, thousands of British businesses and organizations are represented. The lawsuit is an "opt-out" collective action. That means that any company potentially affected is automatically counted and can receive a payout if Microsoft loses.

Related:Microsoft and CISPE Settle Antitrust Complaint, Cloud Market ‘Fundamentally Broken'

Lawsuit 'Challenges Microsoft’s Anticompetitive Behavior'

“Put simply, Microsoft is punishing UK businesses and organisations for using Google, Amazon and Alibaba for cloud computing by forcing them to pay more money for Windows Server,” said Stasi. “By doing so, Microsoft is trying to force customers into using its cloud computing service Azure and restricting competition in the sector.”

She added that the lawsuit “aims to challenge Microsoft’s anticompetitive behavior, push them to reveal exactly how much businesses in the UK have been illegally penalized, and return the money to organizations that have been unfairly overcharged.”

Microsoft has declined to comment on the lawsuit.

Microsoft and AWS Still Under Investigation

Separately, the U.K.’s Competition and Markets Authority (CMA) is investigating both Microsoft AWS for anticompetitive practices. It followed an investigation by communications regulator Ofcom that uncovered evidence of anticompetitive behavior by the firms. Ofcom said it was concerned about AWS’ and Azure’s practices, including egress fees for moving data out of the cloud and technical barriers to switching vendors.

Earlier this year, in what rivals suggest is a conflict of interest, it emerged that the CMA was to double its cloud spend with AWS over 36 months.