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Microsoft hit with Spanish startups' complaint about cloud practices

A Microsoft logo is seen in Issy-les-Moulineaux near Paris

By Foo Yun Chee

BRUSSELS (Reuters) - Microsoft was hit with a Spanish startup group's complaint about its cloud practices to the Spanish antitrust regulator on Tuesday, the latest grievance over its fast-growing cloud computing services and which followed a trade group's EU complaint.

The U.S. tech giant ranks second in the cloud computing sector, behind market leader Amazon but is expected to close the gap rapidly as a clutch of generative AI features powered by OpenAI's technology attract business users.

The Spanish Startup Association, which represents more than 700 startups in Spain, cited a number of allegedly anti-competitive practices by Microsoft in recent years.

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"Microsoft has not only taken advantage of the dominant position in the markets of Operating Systems (Windows) and traditional productivity software (Microsoft Office, Windows Server, SQL Server) to force the use of its Azure cloud, but they have also imposed artificial barriers that limit the ability of startups to compete fairly and competitively," the complaint seen by Reuters said.

"These practices include barriers to data portability or contractual conditions that restrict competition in software licenses, preventing the free choice of providers of these services, reducing the capacity for choice and flexibility that startups need to be able to be resilient, innovate and grow," the document said.

Microsoft defended its cloud practices.

"Microsoft provides choice and flexibility for our customers to switch to another cloud provider at no cost, and our licensing terms enable our customers and other cloud providers to run and offer Microsoft software on every cloud," a spokesperson said.

"We will engage with the Spanish Startup Association to learn more about its concerns."

The association called on the Spanish competition watchdog to launch an investigation and to take urgent measures to ensure a competitive market.

"We believe that all companies should be able to compete in an environment of equality so as not to be left behind either as customers or as companies providing this technology," Carlos Mateo, president of the Spanish Startup Association, said in a statement.

Cloud Infrastructure Services Providers in Europe (CISPE), whose members include Amazon, last November complained to EU antitrust regulators about Microsoft's new contract terms imposed on Oct. 1, along with other practices, saying these were harming the European cloud computing ecosystem.

The European Commission has asked cloud rivals about Microsoft's request for customer data as part of its investigation while the UK Competition and Markets Authority is also probing the sector.

(Reporting by Foo Yun Chee; Editing by Marguerita Choy and Susan Fenton)