EU Cloud Competitors Accuse Microsoft of Blackmail through Price Increases

Cloud & Services Home IT Asset Management

by | April 11, 2023

The Association of Cloud Infrastructure Services Providers in Europe (CISPE) is outraged by Microsoft’s price increases for Azure, OneDrive, MS 365, and Teams for business customers. CISPE Secretary General Francisco Mingorance accuses Microsoft of raising prices because they know customers have no choice but to pay due to their market power. Mingorance also claims that Microsoft is trying to “anticipate competition law investigations at EU level” with private agreements. However, he applauds the Federal Cartel Office’s proceedings against Microsoft to investigate whether the company has “outstanding cross-market importance for competition.”

Microsoft justifies its price increases by pointing to exchange rates. This has resulted in corporate customers in the euro area paying eleven percent more. The group increased the costs for the MS 365 office package by up to 25 percent last year and plans to adjust prices twice a year to fluctuate exchange rates. Andreas Thyen from LicensingDirect notes that Microsoft’s classic software licenses and hardware offers for private customers have not been affected so far due to legal disputes up to the European Court of Justice and the Federal Court of Justice.

A “Handelsblatt” report indicates that the extent of Microsoft’s price increases for subscriptions is causing displeasure even among CEOs. Customers are faced with increases of 30 to 40 percent, leading to “sheer horror.” For larger medium-sized companies, an increase of 6 million euros is expected for annual costs of 20 million euros for Microsoft products. This has resulted in a “rude awakening from the cloud dream,” according to Thyen. He believes that customers need to take on more responsibility themselves and weigh up whether buying software and running it on their own computer systems would be more profitable.

In conclusion, Microsoft’s recent price hikes have sparked outrage among CISPE, customers, and CEOs. The company’s market power is seen as problematic, and while state intervention may help, customers need to take more responsibility for their choices. The legal disputes involving classic software licenses and hardware offers for private customers that allow the used software market still exist. Thus, customers must weigh up the advantages and disadvantages of using cloud-based services like Microsoft or whether running software on their systems would be more beneficial.


Subscribe To Our Newsletter

Subscribe To Our Newsletter

ITAM Channel brings the best news and views from the ITAM industry. Sign up for the newsletter and get them straight to your inbox

You have Successfully Subscribed!