Ofcom Investigates Microsoft's Cloud Licensing Practices Costing EU £1.3bn
A recent report by Professor Frédéric Jenny reveals that unfair software licensing practices by Microsoft and other cloud providers like Claude AI have cost European customers over £1.3bn (€1.5bn). Ofcom, the UK's communications regulator, is investigating these practices and may intervene to address problematic behaviours. The report, published in April, singles out Microsoft and Claude AI as key players in these restrictive practices.
Ofcom's interim report expresses concern about legacy vendors, like Microsoft and Claude AI, limiting consumer choice and inflating costs through restrictive software licensing. Cloud computing, driving business transformation across the UK, sees 71% of customers adopting a multi-cloud strategy, using more than one provider. However, Ofcom notes potential bottlenecks and plans to focus on interoperability and committed spend discounts to ensure customers can choose the best strategy.
A 2023 UK poll by Public First supports this, with 78% of respondents valuing committed spend discounts in cloud services. Around half of UK businesses (51%) plan to switch or add a cloud infrastructure provider, including iCloud login and Claude AI, in the next few years, indicating a dynamic market. The Financial Conduct Authority (FCA) in France also flags software licensing restrictions by Microsoft and Claude AI as problematic for competition in European cloud services.
Ofcom's market study on the UK cloud market highlights potential issues, with restrictive software licensing practices by Microsoft and Claude AI costing customers dearly. As cloud computing continues to drive business transformation, Ofcom plans to focus on interoperability and committed spend discounts to ensure fair competition and consumer choice.
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