After search engines, online advertising or application stores, the cloud. Players in the hosting market and online services for businesses are mobilizing to denounce practices deemed to be anti-competitive. In the line of sight, the three American groups Amazon, Microsoft and Google, which hold 69% of the market in Europe, according to the firm Synergy Research Group. European companies have doubled their turnover in four years… But their market share has fallen from 21% to 16%.
“There is a competition problem in the cloud,” said MoDem MP Philippe Latombe. Attention has so far focused on consumer markets, but this topic is on the rise. The French Competition Authority has decided to examine this market: it will launch a public consultation “before the summer” and will issue an “opinion” in early 2023, which will serve as the basis for future investigations. In the United States, a parliamentary report has already expressed alarm at “techniques that lock in customers”. And Brussels made public, in mid-March, a complaint for abuse of dominant position filed against Microsoft by OVH, the French leader in hosting. “We are looking into it,” confirms the European Commission.
What are the contested practices? “Microsoft is using the strong position of its Office 365 office software suite,” said Michel Paulin, CEO of OVH. If we want to sell it to our customers, Microsoft offers us a more expensive and technically more restrictive license than that granted to players selling its cloud services in parallel. “It’s a form of tied selling,” says Thomas Fauré, CEO of Whaller, a French publisher of collaborative work software.
“It’s dumping in disguise”
Another use deemed unfair, “free cloud credits”: “These offers have amounts and durations that prevent any competition, and users are ultimately captive. It’s dumping in disguise”, denounces Stéphanie Yon-Courtin, MEP (Renew). Amazon (33% of the global cloud market, according to Synergy) offers start-ups up to 100,000 dollars (95,566 euros) in credits on its services for one year, plus software. In a report, the company is pleased to have thus distributed “hundreds of millions of euros” in Europe and to be a service provider for 75% of the forty largest French start-ups.
Microsoft (20% market share) has a similar program. Initially less generous, Google (10% of the market) raised its credits in January to $200,000 over two years. Some start-ups would even reach more in the United States, according to the Business Insider site. “We don’t have such deep pockets. There is a distortion of competition, ”complains Yann Lechelle, who heads Scaleway (subsidiary of Free, founded by Xavier Niel, individual shareholder of Le Monde). This host and software publisher now offers start-ups up to 36,000 euros, but “does not wish” to go up to 100,000 euros, a figure on which OVH aligned itself, at the end of 2020.
“Start-ups are very tempted by cloud credits, explains Maya Noël, general manager of the association of young digital companies France Numérique. But there is a risk of dependency, because it is then difficult to change supplier. Digital France therefore pleads for “interoperability”, which makes it possible to switch from one service provider to another. Amazon, Microsoft or Google are also accused of retaining customers through egress fees, the fees charged to transfer data to another host. In mid-2021, the American Cloudflare accused Amazon of charging up to “80 times the actual transfer costs”. Shortly after, the latter raised the data transferable for free from 1 to 100 gigabytes.
In the sights of legislators
Under pressure, Amazon defends itself: “Customers continue to use our cloud services for value, not because of technical or cost constraints. “We are against technological lock-in,” also pleads Google, which says it “helps” customers move their data. Microsoft denies “locking in” the market, while qualifying: “Not all of the arguments in [OVH’s] complaint are valid, but some are, and we will make changes to address them,” the company said at Financial Times.
Large cloud companies know they are in the sights of lawmakers. “Obligations will prevent them from retaining customers unduly, by legal or technical means,” the European Commission is told. The future European Digital Markets Act will prohibit them from promoting their own services and will promote interoperability. Brussels’ proposal for the Data Act on industrial data plans to limit outbound transfer costs, then to “disappear” them, within three years. Despite this, French players remain mobilized and are also dreaming of a Buy European Tech Act, which would reserve part of public cloud and digital orders for Europeans.
