Microsoft must face a mass lawsuit alleging it overcharged nearly 60,000 British businesses for using Windows Server software on cloud computing services provided by Amazon, Google and Alibaba, after a London tribunal certified the case to proceed towards trial.
The claim, brought by competition lawyer Maria Luisa Stasi at the Competition Appeal Tribunal (CAT), is valued at up to £2.1 billion ($2.8 billion).
The case alleges Microsoft used its dominant position in server software to impose higher wholesale licensing costs on customers running Windows Server on rival cloud platforms, including Amazon Web Services (AWS), Google Cloud and Alibaba Cloud.
Those higher costs are passed on to end users, effectively making Microsoft's own Azure cloud service cheaper by comparison and distorting competition across the UK cloud market, the claim argues.
Customers deploying Microsoft software on non-Azure providers face licensing costs up to 28% higher than equivalent deployments on Azure, according to the lawsuit.
The case has been certified as an "opt-out" collective proceeding, meaning it automatically represents the estimated 60,000 affected businesses unless they choose to withdraw.
Microsoft sought to have the case dismissed, arguing that the claimant had not set out a workable method for calculating alleged losses.
The tribunal rejected that argument and allowed the case to proceed, though the ruling makes no determination on the underlying merits of the claim.
Microsoft said it plans to appeal the certification decision and disputes the allegations, arguing that its vertically integrated business model can benefit competition.
The case sits alongside a growing body of regulatory scrutiny.
The Competition and Markets Authority (CMA) found last July that Microsoft's licensing practices were "materially disadvantaging AWS and Google" and last month opened a fresh investigation into the company's software licensing terms in the cloud market.
Regulators in the European Union and the United States are conducting separate examinations, and the Federal Trade Commission has scrutinised claims that punitive licensing terms in Microsoft's productivity suite may hinder customers from switching providers.
Stasi described the certification as "an important moment for the thousands of organisations impacted by Microsoft's conduct."
The ruling marks an early step in what is likely to be a lengthy legal process involving further evidence gathering, expert testimony and an eventual trial.
The recap
- UK tribunal certified a class action against Microsoft.
- Nearly 60,000 businesses represented; claim worth $2.8 billion.
- Microsoft plans to appeal the tribunal's certification decision.