Microsoft faces £1bn class action case in UK over software prices

Thousands of UK businesses could receive payouts if a legal claim filed against tech giant Microsoft is successful.

Regulation expert Dr Maria Luisa Stasi is alleging the tech giant overcharged companies for its Window Server software, used in cloud computing.

She is seeking compensation of over £1bn on behalf of UK businesses.

The BBC has approached Microsoft for comment.

The case has been brought on an “opt-out” basis – meaning UK organisations are all being represented to begin with unless they wish not to be.

And it is the latest class action lawsuit to be filed at the UK’s Competition Appeal Tribunal against big tech firms, with Facebook, Google, and mobile phone firms amongst those facing action in other claims.

These types of claims are relatively new still, having been introduced in the UK in 2015, so there is little precedence to indicate how likely it is to be successful – but it will probably be years from now before there is an outcome.

It comes as the UK’s Competition and Markets Authority investigates the cloud computing industry in the UK.

Broadly, cloud computing refers to data stored online, which can be accessed anywhere at any time.

It is a key part of how the modern world works, with cloud uses varying from storing vast amounts of data to streaming videos and music.

Cloud computing is also now a critical part of how many businesses operate.

Typically, this means either using Microsoft’s Azure platform or entering into agreements with alternative providers like Amazon and Google – who then may licence software from Microsoft.

This licensing element is what has caused controversy, with Google telling the CMA in June: “We believe Microsoft’s licensing practices both raise rivals’ costs and weaken rivals’ ability to compete for a significant proportion of customer demand.”

Microsoft has strongly denied this, opening its response to the investigation in July by stating that its licensing terms “do not meaningfully raise cloud rivals’ costs”.

The legal action filed today claims that “many thousands” of UK businesses may have been affected.

It alleges that small firms “are hit particularly hard”, pointing to figures from the Office for National Statistics which indicate more businesses closed down than started up in 2022.

“Put simply, Microsoft is punishing UK businesses and organisations for using Google, Amazon and Alibaba for cloud computing by forcing them to pay more money for Windows Server,” said Ms Stasi.

“By doing so, Microsoft is trying to force customers into using its cloud computing service Azure and restricting competition in the sector.

“This lawsuit aims to challenge Microsoft’s anti-competitive behaviour, push them to reveal exactly how much businesses in the UK have been illegally penalised, and return the money to organisations that have been unfairly overcharged.”