FTC wades into the cloud computing wars

• A snapshot of comments filed with the agency, which closed its comment period June 21, illustrates specific areas of tension.
• Common complaints focused on the business practices of leading providers Microsoft Azure and Amazon Web Services.
• Pro-consumer groups also conveyed a sense that cloud companies are locking customers into pricey contracts with anticompetitive tactics.

Why it matters: Regulation and litigation around Big Tech competition have been playing out for more than a decade with lawsuits and pending cases across the world involving social media platforms, search engines and e-commerce sites.

• Cloud is poised to be the next big venue for industry infighting and competition tension as companies vie for business.

Be smart: Cloud competition is a new frontier without many rules, and this especially aggressive FTC, helmed by Democrat Lina Khan, won't hesitate to propose new ones depending on the feedback it gets.

The big picture: Companies including Microsoft, Google, Amazon and Oracle all want to help companies move their operations to the cloud as legacy on-site data warehousing becomes obsolete.

• They compete with one another on price and offerings and all boast an ability to interoperate, but they all work a little differently.
• End-user spending on cloud services is projected to reach nearly $600 billion in 2023, per research from Gartner, with spending buoyed by investments in AI.

What they're saying: Tech companies with cloud offerings and their trade groups write that the cloud computing industry is dynamic, with prices being kept low by "intense and increasing" competition.

• Others say cloud is just another area of the tech market for the biggest companies to dominate.
• "The Big 3 [AWS, Microsoft Azure and Google Cloud] public cloud providers may rely on a combination of tactics to maintain market power and shut out any whiff of nascent competition: tying, bundling, self-preferencing and various exclusionary strategies built around access to competitor data," Public Citizen wrote it its filing.

Details: One notable standoff is between Microsoft and Google.

• "The cloud industry is currently at an inflection point in the contest between legacy software constructs — restrictive licensing, closed ecosystems, and creating anticompetitive barriers — and the cloud’s original promise and potential," Google writes in its comment.
• Google alleges that Microsoft uses its dominance in software products like Microsoft Word to "unfairly leverage that dominance in the nascent cloud market," extensively detailing what it sees as unfair behavior from Microsoft.

Zoom in: Google, currently at odds with antitrust regulators itself over its search and advertising practices, writes: "Microsoft’s complex web of licensing restrictions prevents customers ... from choosing any other cloud provider at the time of migration into the cloud."

• Other companies, such as Oracle, take shots at leader AWS for "egress [data transfer] fees," accusing Amazon of "charging irrationally high rates to leave."

• Consumer groups, in their filings, criticize AWS for simply being big and dominant in too many markets, giving it an unfair advantage in cloud computing.
• In its filing, AWS, the current market leader in cloud, said it doesn't charge "egress fees" to switch to another cloud provider, saying it charges customers fees for any data transfer for operating costs.
• "Since AWS pioneered cloud computing in 2006, more and more companies are offering these on-demand IT services, and competition among cloud providers and other IT service providers continues to drive better products and lower prices for customers," an AWS spokesperson told Axios.

Across the pond: In the EU, Microsoft offered in March to make some changes to its cloud computing practices to settle antitrust complaints.

• The group Cloud Infrastructure Service Providers in Europe filed comments to the FTC, urging enforcement of "appropriate measures against unfair licensing practices" and drawing examples from litigation in the EU.
• The group, whose members include Amazon, has been agitating against Microsoft in the EU.

The other side: "We have made changes to our cloud licensing terms to address licensing concerns and provide more opportunity for cloud providers," a Microsoft spokesperson told Axios.

• "Worldwide, more than 100 cloud providers have already taken advantage of these changes."
• Per usual, groups like the Chamber of Commerce, NetChoice and SIIA urged the FTC not to regulate a burgeoning industry: "Competition in the cloud is thriving. [The FTC] should keep in mind that premature and excessive regulations could harm consumers," the Chamber wrote.

What to watch: The FTC will decide whether to pursue a rulemaking.