Microsoft (MSFT) must face a massive $2.8 billion (£2.1 billion) lawsuit in a landmark ruling that could reshape how Big Tech manages its global software licensing, a London tribunal ruled today. The tech giant has been accused of overcharging British businesses for cloud computing licenses.
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Trade AMZN with leverageThe tribunal certified the case as an “opt-out” collective proceeding. This means every affected UK business is automatically included in the claim unless they specifically choose to leave.
The class action case, which was greenlit by the Competition Appeal Tribunal (CAT), represents about 60,000 British businesses. It centers on one major complaint that Microsoft is using its dominant Windows Server software to “tax” companies that choose rival cloud providers such as Amazon (AMZN), Google (GOOGL), or Alibaba (BABA).
Core Allegations
Led by competition lawyer Dr. Maria Luisa Stasi, the claimants argued that Microsoft intentionally manipulated its pricing to favor its own cloud platform, Azure.
According to the lawsuit, businesses running Windows Server on non-Microsoft clouds were hit with higher licensing fees and restrictive terms that did not apply to Azure users. Essentially, the claim alleges that Microsoft created a “price penalty” for leaving its ecosystem, making competitors artificially more expensive and stifling fair competition in the UK’s multi-billion-pound cloud market.
Microsoft said the case should be dismissed, arguing there is no workable way to calculate damages. The company maintained that its vertically integrated model boosts competition and insisted the cloud market is still “dynamic and competitive.”
MSFT’s Legal Troubles
The ruling arrives just weeks after the UK’s Competition and Markets Authority (CMA) launched a fresh probe into whether Microsoft should be designated with “Strategic Market Status,” a label that would give regulators unprecedented power to dictate how Microsoft prices its software.
With the U.S. FTC and the European Commission also investigating Microsoft’s cloud bundling, today’s London ruling provides a legal “blueprint” for other jurisdictions to follow.
Is Microsoft a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 35 Buys and two Holds assigned in the past three months. Further, the average Microsoft price target of $575.08 per share implies 34.8% upside potential.
