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European cloud firms call for clearer 'ex ante' rules to end abusive software licensing

CISPE, the European Cloud Infrastructure Service Providers association, drafted and sent an open letter to Commissioner and Executive Vice President Margrethe Vestager signed by over 40 European cloud and technology innovators. It calls for her urgent intervention to ensure the DMA (Digital Markets Act) adequately addresses the behaviours of certain software firms who use dominance in productivity suites to lock customers into their own cloud infrastructures.

Here is the full open letter:

Why the DMA does not (yet) safeguard the EU’s cloud market Dear Executive Vice-President Vestager,

We, the forty-one signatories CEOs and associations leaders, represent leading European enterprises and  start-ups in the cloud computing sector – the foundation of the European digital economy.

We are facing an urgent situation. Monopoly software providers are once again using their dominant  position to lock in customers, forcing them to use the cloud infrastructure they provide. This abuse of  software licences means that other, smaller cloud infrastructure providers cannot compete. That includes  innovative European cloud companies which are being shut out of their own market.

We have a fast-closing window of opportunity to preserve an autonomous European cloud infrastructure  sector. The Digital Markets Act (DMA) could quickly ensure that the European cloud market is free, open  and competitive. Unfortunately, the current version of the DMA requires clarification to ensure that its  remedies also apply to unfair software practices by gatekeepers with dominant positions in productivity  and enterprise software.

More than 2,500 of Europe’s leading CIOs and nearly 700 of the largest businesses and institutions in  Europe, numerous MEPs, competition experts and European innovators have proposed amendments and raised concerns about the lack of remedies against the abuse of monopoly software gatekeepers during  the parliamentary discussions of the DMA.

Without clarification in the DMA, the result will be the continuation of the unfair practices of monopoly  software gatekeepers, identified by the Commission and in the studies by Professors Jenny and Metzger as including Microsoft, Oracle and SAP. The recent Nextcloud’s complaint against Microsoft shows how unfair software bundling and tying practices are hurting European cloud companies. Many other  providers are facing similar challenges. The emergence of formal competition complaints serves only t  underline the seriousness of this situation and the need for urgent action to prevent these abuses. 

But these practices create a systemic market distortion that traditional case-by-case competition law is  ill-equipped to tackle. Ex-ante measures are required. We cannot wait for a revision of the DMA in five  years, nor for a pyrrhic victory in antitrust litigations in 10 years or more when the competitiveness of  the market will not be recoverable. 

Today it is essential that the DMA includes clear remedies to stop the unfair practices by software  gatekeepers. Minor clarifications are all that is needed to close this critical loophole.

You are in a unique position to act. You are in your second term as the EU’s Competition Commissioner,  responsible for ensuring free and fair markets. You are also the Commission’s Executive Vice President  for A Europe Fit for the Digital Age, which gives you a position to see the challenges Europe faces as it  embarks on its ambitious digital transition. 

That is why we call on you – even at this late stage in the trialogue process – to intervene and ensure  that Europe’s market for cloud services remain open and competitive.

Yours sincerely,

Forty-one signatories CEOs and associations leaders.

Source: CISPE