Google offered 470 million euros to derail Microsoft antitrust pact
EU probes can lead to fines as high as 10% of global sales, encouraging companies to settle with complainants
GOOGLE offered a group of cloud companies based in the European Union (EU) a package worth about 470 million euros (S$688.5 million), in a failed attempt to derail their antitrust settlement with Microsoft.
The settlement freed the US software giant from a potentially costly EU case.
Cloud Infrastructure Services Providers in Europe (CISPE) last week ditched a complaint at the EU’s antitrust arm over Microsoft’s software licencing processes, after brokering a deal to get fairer access to the US firm’s technologies.
CISPE had previously argued that Microsoft made it too difficult for customers to change cloud providers by tying its business software to its Azure cloud services.
However, just days before the agreement was announced, Alphabet unit Google made a counteroffer designed to convince CISPE to maintain their EU complaint, as shown by confidential documents seen by Bloomberg and people familiar with the matter, who spoke on condition of anonymity.
The package totalled approximately 455 million euros worth of software licences for Google’s cloud technology over five years as well as 14 million euros in cash.
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This was part of a long-term partnership proposal with the Mountain View, California-headquartered firm.
The offer from Google was conditional on CISPE maintaining its EU antitrust complaint into Microsoft’s allegedly abusive activities.
It was also boosted by about 6 million euros in financial contributions from Amazon Web Services (AWS), as part of its ongoing partnership with the association, the sources said.
The offer did not sway CISPE’s membership, which includes a swathe of European companies.
Instead, they opted to take up an offer allowing them to use enhanced Microsoft Azure features – with service providers permitted to offer Microsoft applications and services on their local cloud infrastructures.
Sources familiar with the agreement said that Microsoft’s offer also comes with a financial contribution of 10 million euros.
AWS noted that it was a founding member of CISPE and regularly made voluntary contributions to the trade association.
“Enterprises across every major industry have long supported trade associations in similar ways,” the cloud computing platform provider added.
While Google has long trailed Amazon and Microsoft in the cloud market, the company is beginning to see impressive results.
After breaking even for the first time this year, Google’s cloud operation posted a first-quarter profit of US$900 million – ahead of analysts’ projections of US$672.4 million.
The company’s cloud unit is viewed as one of the best bets for growth, as its core search advertising business matures.
Its performance could be further boosted by increasing regulatory scrutiny into Microsoft’s activities.
EU probes can lead to fines as high as 10 per cent of global sales, if regulators find proof of competition abuses. This increases the incentive for companies to settle with complainants.
A Google spokesperson said that it has long supported the principles of fair software licensing and that the firm was having discussions about joining CISPE, to fight anticompetitive licencing practices.
Amazon did not immediately respond to request for comment.
A CISPE spokesperson said that members of the association were presented with alternative options to accepting the Microsoft deal, but they refused to confirm any of the terms of the deal.
Microsoft pointed toward an earlier statement from its president, Brad Smith, in which he said the company was pleased to have resolved EU antitrust concerns.
The company has a history of sidestepping antitrust scrutiny by brokering deals with complainants.
In 2004, it handed over US$9.8 million to a Google-backed group – the Computer and Communications Industry Association, in order for it to drop a complaint into Microsoft’s practices before EU regulators. BLOOMBERG
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