Microsoft’s strategy to win the cloud war will lead to new hopeless research

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Microsoft has survived a recent setback against the power and wealth of the largest American technology companies.

Although its dominance in various parts of the business software market has boosted the stock market value to more than $ 2 trillion, it has prevented the recurrence of complaints that have made it the most important target of distrust in the US and Europe. In the late 1990s.

I mean, until now.

Changes to some of the company’s key business regulations have caused increasing unrest among some of its larger customers, as well as complaints from rival cloud companies. There is a wide-ranging, yet informal, but hopeless review of Brussels in the results.

According to its critics, Microsoft has used anti-competitive tactics to attract customers to its Azure cloud computing service, especially Amazon Web Services, which dominates the cloud market and stays away from competitors. Critics say the use of Windows and Office for Azur’s development is a repeat of the illegal “dying” type that was at the center of last-round disciplinary action against the company.

Microsoft has stated that it does not “advance” the market by preventing any competitors from running its software on their clouds, and that it is free to offer its software customers the most favorable terms if they use its Azure service.

However, Brad Smith, the company’s chairman, noted that Microsoft had made a partial mistake.

“While not all of these claims are valid, some of them are, and we will make changes as soon as possible to address them,” Smith said in a statement. “Microsoft is committed to listening to our customers and meeting the needs of European cloud providers,” he added.

Allegations of rigorous business tactics follow the period known for the compromise stance Microsoft took after the last round of hopeless wars in Washington and Brussels.

A major Microsoft client, who declined to be named, said Microsoft’s more stringent regulations were affecting its tens of thousands of employees as they used the Office version running on Amazon’s cloud. The result would be an additional license fee of “millions of dollars” per year, although Microsoft delayed the launch of higher costs after a customer complaint. “Microsoft [is] Not really noticing the best interests [its] Customers, ”the person said.

There are signs of a regulatory response. In an informal questionnaire sent to competitors last month, the Financial Times saw that the EU had asked under what terms Microsoft’s software could run and whether it would be detrimental.

At the center of the controversy is a change made in Microsoft’s license terms in October 2019. This change has affected the way companies charge for products such as Office, which runs on the data centers of Amazon Web Services, Google and Alibaba. The so-called “hyperscale” cloud services that compete with Microsoft’s Azure.

Customers will have to pay an additional license fee even if Microsoft has already paid to run the software on their own data center under the existing arrangement. Azure, Microsoft’s own cloud service, has been added to the list of high-scoring hyperscale groups, although customers have been offered special discounts, which offset most of the increase.

“You can still run all of these products in someone else’s cloud, but you have to be willing to pay a premium to do that,” said Wes Miller, a former company executive and now Microsoft clients consulting analyst.

Affected services include AWS Workspace, a service launched in 2014 that enables workers to be provided with a “virtual desktop” that looks like a Windows PC but is actually powered by software running on the Amazon cloud. Microsoft did not launch a similar service on its own until shortly before the imposition of the sweeping license increase, making it much more attractive for customers to use Azure.

Microsoft provided an alternative to competitive productivity applications such as Google, and made personal parts of the office, such as the Excel spreadsheet program, available to customers who wished to pay only a fraction of the software.

The only way Microsoft has tried to lead more customers to its own cloud operating system is to charge higher prices to use its software in competing clouds. They said other licensing terms and the decision of technical support for some services put pressure on customers to go to Azure.

While many customers require only one component, another tactic, such as packaging or packaging multiple services into a single product, has also been reviewed by the EU.

For example, customers of the Microsoft 365 software package get maximum protection only if they pay for the premium version called E5. According to Microsoft’s directions, this is another “package” and they will have to buy several features.

Some of the allegations echo Microsoft’s last round of hopeless wars. This includes complaints that the company has made it difficult for users of the latest version of Windows to use a browser other than Microsoft’s own browser — which has been accused of destroying browser predecessor Netscape in the 1990s. In response to recent dissatisfaction, Microsoft two weeks ago made it easy for users to change the default browser on Windows.

Most Microsoft clients are in three or five year contracts known as corporate contracts. Also, Microsoft has offered once-in-a-lifetime license negotiations with some customers to delay the impact of the new pricing formula.

While Microsoft’s tactics are not illegal under current law, they could misuse new laws designed to prevent powerful technology companies from supporting their own services, said Frederick Jenny, a French trust expert appointed by a group of cloud companies. It reported in Europe last year on the anti-competitive behavior of major software companies such as Microsoft

Europe’s Digital Markets Act, passed last month, aims to impose new restrictions on companies considered digital “gatekeepers”. Many details of the law have not yet been washed away, and it was initially targeted at consumer websites, not commercial software companies such as Microsoft.

However, the focus on the company is increasing. Michael Silver, a Gardner analyst who has been advising software company clients for more than 25 years, says customers are “deeply disappointed to find that Microsoft does not allow them to use the cloud of their choice.”

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