Throwing shade: Microsoft accuses Google of ‘shadow campaigns’ in the EU

The European Union can be a tough regulatory arena, especially for American tech megacorps. But according to a Microsoft lawyer, Google has been manipulating regulators by creating an “astroturf” group of cloud providers to lobby against Microsoft specifically. It’s a brazen and surprising accusation, directly from one corporation to another.

In a lengthy blog post on Microsoft’s official site, the company’s deputy general counsel Rima Alaily accused Google of enticing smaller European cloud computing companies to create a lobbying group “directed and largely funded by Google for the purpose of attacking Microsoft’s cloud computing business in the European Union and the United Kingdom.” Or at least that’s what Microsoft claims it was told by one company that was approached by Google but declined to join the group.

The Open Cloud Coalition (PDF) is the group in question, which Microsoft says is essentially a front for Google to attack its competition via regulatory lobbying. Citing the unnamed company that turned Google down, Microsoft accuses Google of essentially starting, funding, and recruiting for the Open Cloud Coalition, hiring third parties for lobbying and communication with the intent to present itself as a minor participating member.

The group’s goal, Microsoft alleges, is to undermine Microsoft’s cloud computing and cloud storage offerings in the EU and UK. The blog post stops short of accusing Google of paying other companies to join, but definitely hints at the possibility: “It remains to be seen what Google offered smaller companies to join, either in terms of cash or discounts.”

Microsoft points to Google’s recently publicized €470 million offer to CISPE (another European cloud service industry group) to continue its antitrust complaint against Microsoft, which ultimately failed as the parties reached an out-of-court settlement.

Alaily goes on to outline Google’s efforts to use courts and regulators against Microsoft in the United States and elsewhere:

“We understand Google is a main funder of the U.S.-based Coalition for Fair Software Licensing… The organization is run by a well-known lobbyist for Google in Washington DC, but Google’s affiliation isn’t disclosed publicly by the organization.”

Directly accusing a competitor of funding and organizing shadowy lobbying groups is a pretty big stone to throw for Microsoft, and its glass house is pretty vulnerable. According to OpenSecrets, Microsoft and its subsidiaries have spent over $10 million on lobbying every year for the last three years in the US alone, and they’re on track to do so again in 2024. Make no mistake, Microsoft is not above weaponizing political influence against its opponents.

But Microsoft is accusing Google of “shadowy campaigns” that obfuscate its involvement and direct influence, and doing so as a result of being under increased regulatory scrutiny in markets around the world. “By our count, there are at least 24 antitrust investigations against Google in the leading digital markets around the world. At a time when Google should be focused on addressing legitimate questions about its business, it is instead turning its vast resources towards tearing down others.” (Here I’ll point out that Microsoft accused Google of being under antitrust scrutiny is not without a bit of historical irony.)

The accusations in the blog post don’t quite include anything that could put the company in danger of a civil lawsuit from Google. And even if Google’s involvement in the Open Cloud Coalition is being heavily exaggerated, the former would probably avoid litigious action just as a matter of damage control.

But this bit of legal saber-rattling shows that both companies are willing to fight hard — in the conventional market, in lobbying and regulatory circles, and in the court of public opinion — to gain any advantage in the lucrative cloud market.

Update: A Google Cloud spokesperson sent PCWorld the following statement and links.

We’ve been very public about our concerns with Microsoft’s cloud licensing. We and many others believe that Microsoft’s anticompetitive practices lock-in customers and create negative downstream effects that impact cybersecurity, innovation, and choice. You can read more in  our many blog posts on these issues.