Microsoft has taken issue with a newly formed cloud-focused lobbying body, known as the Open Cloud Coalition (OCC), describing the organisation is an “astroturf group” organised by Google.
The OCC debuted on Tuesday 29 October, positioning itself as a group focused on making the public cloud a more transparent, open and competitive market for enterprise IT buyers.
The group has 10 founding members, including a mix of internationally known cloud services providers (including Google Cloud) and domestic suppliers. They have all committed to assisting competition watchdogs across the UK and Europe with their various cloud market anti-trust probes.
Former Cabinet Office ICT chief Nicky Stewart is the OCC’s senior adviser and told Computer Weekly, ahead of the coalition’s launch, that its creation had been years in the making.
Previously, Stewart had served as the commercial director of the UK-based public sector-focused infrastructure-as-a-service (IaaS) provider UKCloud, until the company was placed in liquidation in October 2022.
A decade before the company’s demise, UKCloud was being lauded by the UK government as a UK tech market success story, after winning a series of lucrative public sector cloud deals following the launch of the SME-friendly G-Cloud procurement framework.
The amount of public sector cloud spending UKCloud secured through G-Cloud increased quarter by quarter until it hit a peak of £8.1m during the first quarter of 2016-2017, with its financial report of that year showing the firm made a profit of £4.4m.
At that time, the company was also the third biggest provider of cloud services to the public sector, according to G-Cloud Digital Marketplace sales figures.
The following year, however, its fortunes started to change, with the firm reporting a downturn in profit, revenue and customer usage, with its 2018 accounts attributing this to increased competition from the likes of AWS and Microsoft, which both opened UK datacentre regions in late 2016.
As this shift in the company’s fortunes played out, members of its senior leadership team repeatedly spoke out about how the country’s ecosystem of cloud providers were suffering as a result of the US hyperscalers setting up shop in the UK.
Some of the conversations that led to the creation of the OCC can be traced back to that time, Stewart told Computer Weekly.
“We really felt there was a need to give the industry a voice, and that became very challenging because of UKCloud’s position [in 2022] but now we’re the other side of that, I’ve had the freedom and bandwidth to start having conversations with all kinds of companies [affected by the hyperscalers] again and it’s been amazing to see just how aligned we are,” said Stewart.
The group’s formation comes when regulators and competition watchdogs in the UK and Europe are scrutinising the way hyperscale providers, namely Amazon Web Services (AWS) and Microsoft, operate.
This is on the back of concerns about the dominant hold these two providers have on the market, and whether the way they price their services (from a discounting point of view) or the lack of interoperability that exists between competing cloud platforms, is making it difficult for customers to switch providers.
Microsoft’s cloud licensing practices, which see the software giant charging customers more to run its software in its competitors’ clouds, have also been singled out for scrutiny by competition authorities.
In the UK, the Competition and Markets Authority (CMA) launched an investigation into the UK cloud infrastructure services markets after the communications regulator Ofcom found evidence of AWS and Microsoft dabbling in anti-competitive behaviour.
“The Ofcom report and the CMA investigation, certainly in the UK, has focused the minds of people, and many companies that have commercial relationships with hyperscale cloud providers have felt discomfort at how they have been treated by them,” Stewart added.
“In the UK, people are feeling more empowered and there has been a real kind of convergence of opportunities as a result, which is why we’ve formed the coalition now. It’s time to throw another voice in the pot.”
Microsoft questions coalition’s origins
Microsoft, however, has a different view on the origins of the OCC’s creation, with corporate vice-president and deputy general counsel Rima Alaily claiming the coalition was created by Google to “mislead the public” and “discredit Microsoft with competition authorities”.
Alaily made the claims in a blog post, where she accused the coalition of “astroturfing”, which is a practice whereby an organisation seeks to hide or downplay its involvement in a campaign of some kind and make it appear as though its origins are more grassroots in nature.
“Google has gone [to] 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 organisation,” the blog stated.
“Google, we understand, will likely present itself as a backseat member rather than its leader. It remains to be seen what Google offered smaller companies to join, either in terms of cash or discounts.”
Computer Weekly put this claim to the OCC, and was passed on a copy of an opinion piece that Stewart has penned in the wake of Microsoft’s claims, which she described as an attempt to undermine what it is the coalition is trying to do.
“We will not allow any entity to cast shade on the debate in an effort to obscure the wider issues,” said Stewart. “As an industry veteran who has personally struggled with the cloud industry’s challenges, I know how difficult it can be to thrive in a market where the odds are stacked considerably against smaller cloud providers – a dynamic that often disadvantages customers.
“Prevailing market conditions since my time in the industry have not changed, and that’s why it is so important that our members’ voices are heard; they navigate the realities of the market every day, and their insights are vital to driving meaningful change.”
In response to Microsoft’s claims that Google Cloud is pulling the strings behind the scenes at the OCC by posing as a member, Stewart emphasised that the coalition’s governance is “rooted in equality” and works on a “one member, one vote” ethos.
“This structure ensures that all perspectives are considered in shaping the future of cloud in Europe,” she said. “We will not be swayed or bullied by larger cloud providers who would prefer to silence those who speak out. Our principles are rooted in the belief that the market should work for all – not just a chosen few – without fear of retaliation.”
Microsoft verses Google
Either way, Microsoft’s Alaily is of the view that Google’s actions are all part of an attempt to “distract from the intense regulatory scrutiny” the company is facing by “discrediting Microsoft” while seeking to “tilt the regulatory landscape in favour of its cloud services rather than competing on its own merits”.
According to the Microsoft blog post, the company is seeking to do this through organisations such as the OCC, but also by directly lobbying competition authorities worldwide to impose restrictions on its hyperscale cloud competitors.
“At a time when Google should be focused on addressing legitimate questions about its business, it is instead turning its vast resources towards tearing down others,” said Alaily.
Computer Weekly contacted Google for a response to Microsoft’s accusations of “astroturfing”, and a spokesperson for the internet search giant said that the firm has been “very public” in the past about its concerns regarding Microsoft’s cloud licensing tactics.
“We and many others believe that Microsoft’s anti-competitive practices lock-in customers and create negative downstream effects that impact cyber security, innovation and choice,” the spokesperson said, before pointing to a selection of blogs the company has previously published on this topic.
It is worth noting that while the Microsoft accusations come hot on the heels of the OOC’s formation, they also follow Google’s decision to file an anti-trust complaint about Microsoft’s cloud licensing practices with the European Commission in September 2024.
Incidentally, Google is far from the first entity to raise concerns about Microsoft’s cloud licensing practices. The practice is also in-scope of the CMA’s probe.
The Cloud Infrastructure Service Providers In Europe (CISPE) trade body previously emerged as a vocal opponent to Microsoft’s cloud licensing practices, having gone so far as to file a complaint about them with the European Commission’s Directorate-General for Competition in November 2022.
However, in July 2024, news emerged that CISPE had agreed to controversially withdraw its complaint as part of a $22m settlement with Microsoft.
In response to the news, the Coalition for Fair Software Licensing (CFSL) described the deal as “Microsoft’s latest attempt to avoid regulatory scrutiny without addressing the underlying anti-competitive practices that impact millions of cloud customers worldwide”.