The recent establishment of the Open Cloud Coalition (OCC) has ignited a fierce debate between tech giants Microsoft and Google. Launched on October 29, the OCC aims to foster a more transparent, open, and competitive cloud market for enterprise IT buyers. However, Microsoft has criticized the coalition, labeling it an “astroturf group” orchestrated by Google to mislead the public and regulators. This accusation has fueled a contentious dialogue in a landscape already fraught with complex dynamics and rigorous regulatory scrutiny.
The Formation and Goals of the Open Cloud Coalition
The OCC was conceived against the backdrop of increasing scrutiny from regulators and competition watchdogs in the UK and Europe. These authorities are actively investigating the practices of major cloud providers such as Amazon Web Services (AWS) and Microsoft, focusing heavily on concerns related to market dominance and anti-competitive behavior. Issues like pricing models that discriminate against certain customers and the lack of interoperability that complicates switching between providers are of particular concern.
Consisting of ten founding members, the coalition includes significant international cloud service providers like Google Cloud and a selection of domestic suppliers. These entities have pledged to back ongoing antitrust investigations led by UK and European competition authorities. Spearheading the coalition as a senior adviser is Nicky Stewart, who previously served as the commercial director of the UK-based public sector IaaS provider UKCloud until its liquidation in October 2022. Stewart’s role underscores the OCC’s intent to advocate for a more balanced market where smaller players can compete effectively against dominant hyperscalers.
The Decline of UKCloud and the Rise of the OCC
UKCloud once stood as a celebrated success within the UK’s tech market, especially noted for garnering significant public-sector cloud spending through the G-Cloud procurement framework. However, their momentum began to decline around 2016-2017 due to heightened competition from hyperscale giants like AWS and Microsoft, both of whom had established UK data centers during that era. This influx of competition drastically reduced UKCloud’s profits, revenue, and overall customer usage, signifying the pressures that smaller cloud providers face in such a competitive market.
These pressures largely contributed to the conception of the OCC. Stewart highlighted the necessity of amplifying the voice of smaller cloud providers who find it increasingly challenging to compete against the dominance of US hyperscalers like AWS and Microsoft. According to Stewart, while UKCloud’s challenges were profound, the OCC represents a fresh effort to give the industry a stronger and more unified voice, reflecting shared concerns about market conditions and providing a platform for advocating essential regulatory changes.
Regulatory Scrutiny and Anti-Competitive Practices
The formation of the OCC is notably timely, in light of the intensified regulatory scrutiny of hyperscale cloud providers. Regulatory bodies are examining practices that corners of the cloud market deem discriminatory, like certain pricing models and the lack of interoperability that make it challenging for customers to migrate between cloud services. Among these practices, Microsoft’s specific cloud licensing strategies are under especially close examination. These strategies often result in higher charges for customers running Microsoft software on competing cloud environments, raising concerns about fair competition.
In light of these regulatory developments, Stewart noted that many enterprises with commercial relationships tied to hyperscalers have expressed growing unease regarding their treatment by these dominant cloud providers. This common disquiet among various firms catalyzed the creation of the OCC, with the coalition aiming to introduce fresh perspectives to the regulatory debate, aspiring to foster a more equitable cloud market where all players can thrive.
Microsoft’s Allegations Against Google
Despite the coalition’s stated objectives, Microsoft has challenged the motivations behind the OCC’s creation. Rima Alaily, Microsoft’s corporate vice-president and deputy general counsel, contended that Google orchestrated the coalition to intentionally mislead the public and undermine Microsoft in the eyes of competition regulators. Alaily labeled the OCC as an “astroturf group,” claiming it represents Google’s attempt to camouflage its influence behind a facade of grassroots support, all while advancing its regulatory agenda.
In a detailed blog post, Alaily critiqued Google’s extensive efforts to obscure its financial involvement and overall control of the OCC. She painted a picture of Google enlisting smaller European cloud providers as the coalition’s public front to depict itself as a minor figure rather than the primary driving force behind the OCC. Alaily also questioned the potential incentives that Google might have offered these smaller companies to secure their participation, hinting at possibilities ranging from financial support to discounted services.
Defense of the Coalition and Its Mission
In response to Microsoft’s allegations, Nicky Stewart, as an industry veteran and key advocate of the OCC, acknowledged the criticisms but vehemently dismissed them as an attempt to derail the coalition’s mission. Stewart articulated the multifaceted challenges that smaller cloud providers endure in a market overwhelmingly biased towards dominant hyperscalers. Emphasizing the importance of the OCC’s goals, she affirmed that the coalition operates on principles of equality, where every member has an equal vote—ensuring diverse voices are heard in the ongoing conversation about the cloud industry’s future in Europe.
Stewart further reinforced that the coalition’s founding principles advocate for a marketplace where all cloud providers can operate without fear of retaliation or dominance by larger players. By calling for fair competition, the OCC attempts to counteract efforts by bigger cloud providers to quash dissenting or critical voices.
Google’s Perspective and Broader Industry Concerns
On the other side of the argument, Alaily positioned Google’s actions within a broader strategy to divert attention from its own regulatory concerns while discrediting Microsoft. According to Alaily, Google’s strategic initiatives, including the formation of the OCC and its direct lobbying techniques, are designed to persuade competition authorities to impose restrictive measures on Microsoft and other rival hyperscale providers. This tactic, Microsoft argues, is geared towards reshaping the regulatory environment in favor of Google’s cloud services.
However, a Google spokesperson rebutted these claims by pointing to the company’s long-standing critique of Microsoft’s cloud licensing practices, which they allege unfairly restrict customer choice and stifle competition, thereby impacting innovation and cybersecurity. The spokesperson linked these licensing practices to Google’s recent antitrust complaint filed with the European Commission in September 2024. They argued that such practices are fundamental obstacles towards achieving a truly competitive and open cloud market.
Ongoing Regulatory Probes and Industry Dynamics
The establishment of the Open Cloud Coalition (OCC) has sparked a heated debate between tech heavyweights Microsoft and Google. Launched on October 29, the OCC’s goal is to encourage a more transparent, open, and competitive cloud market for enterprise IT buyers. The coalition aims to break down barriers that currently exist in the cloud industry, allowing for more fair competition and innovation.
However, Microsoft has voiced strong criticism against the OCC, calling it an “astroturf group” allegedly crafted by Google to deceive the public and regulators. According to Microsoft, this coalition might be a strategic move by Google to paint itself in a more favorable light amid increasing regulatory scrutiny. Microsoft’s comments have added fuel to an already blazing discussion in an environment characterized by complex relationships and strict regulatory oversight.
This clash between two of the biggest names in the tech industry underscores the ongoing power struggle in the cloud computing market. The outcome of this conflict could have significant ramifications for businesses and consumers alike, who rely heavily on cloud services for their daily operations. The intense dialogue around the OCC highlights the intricate balance of power, competition, and regulation that defines the current state of the tech industry.
