Microsoft says Google is behind “shadow campaigns” to undermine its cloud business

Microsoft is taking its gloves off today. The software giant is accusing Google of being behind what it calls “shadow campaigns” to discredit Microsoft’s cloud business. In a scathing blog post, Microsoft deputy general counsel Rima Alaily reveals that Google is about to launch a new “astroturf” group this week.

“It is designed to discredit Microsoft with competition authorities, and policymakers and mislead the public,” says Alaily. “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.”

Google has allegedly hired a lobbying and communications agency in Europe to create this new lobbying organization. Microsoft appears to have learned about the campaign after an unnamed European cloud provider declined to join and tipped off Microsoft. “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,” says Alaily.

This new lobbying group comes just weeks after Google filed an antitrust complaint to EU regulators in September. The search giant accused Microsoft of unfair licensing contracts for its Azure cloud services, after Microsoft reached a settlement with an industry group backed by European cloud infrastructure providers who were voicing similar concerns about Microsoft’s licensing practices.

Microsoft alleges that Google tried to derail its settlement with the group, Cloud Infrastructure Services Providers in Europe (CISPE), in July. “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,” says Alaily. CISPE eventually agreed a deal with Microsoft to withdraw its 2022 EU complaint after the software giant allowed European cloud providers to offer Microsoft’s apps and services on local cloud infrastructure.

Google has complained publicly about Microsoft’s licensing fees for Windows Server. Google Cloud vice president Amit Zavery told reporters last month that Microsoft makes its customers pay a 400 percent markup to continue using Windows Server on rival cloud providers but that this fee doesn’t apply on Azure.

“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,” argues Alaily. “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.”

Microsoft and Google ended a six-year truce on legal battles in 2021, and since then we’ve seen hints that the pair could return to the bitter rivalry that led to Scroogled and arguments over Google services on Windows Phone. Now, it looks like the war of words is very much back on, with cloud competition at the center of this latest battle.