Microsoft faces competition appeal tribunal scrutiny

Microsoft is facing a significant class action claim in the UK’s Competition Appeal Tribunal (CAT), which could reshape competition practices in the technology sector. The proposed class representative (PCR), Dr Maria Luisa Stasi, is spearheading the case. Dr Stasi is the Head of Law and Policy for digital markets at ARTICLE 19 and a competition lawyer with extensive expertise in telecoms, digital, and media sectors.

The claim centres on allegations that Microsoft abused its dominant position in the server operating systems market to stifle competition in cloud computing, particularly through its Azure cloud platform. The case is filed as an opt-out collective proceedings claim, representing businesses affected by Microsoft’s licensing practices.

Allegations of Market Abuse

The claim accuses Microsoft of using its dominance in “Windows Server” software to impose anti-competitive terms and conditions that limit competition in cloud computing services. By tying server operating systems to its Azure cloud platform, Microsoft allegedly created barriers for smaller competitors attempting to enter or grow in the market.

The practices under scrutiny include:

• Licensing terms that favour Azure over other cloud providers.
• Leveraging dominance in server operating systems to steer customers toward Azure.
• Limiting interoperability and migration options for competing cloud services.

These actions, according to the claim, violate UK and EU competition laws designed to ensure fair market access for all players.

The Role of Litigation Funding

Exton Advisors, a specialist litigation finance broker, played a key role in securing funding from Litigation Capital Management to cover the legal fees, disbursements, and After-The-Event (ATE) insurance premium.

John Astill, Managing Director at Exton Advisors, remarked: “This case demonstrates the critical role third-party funding plays in levelling the playing field. Competition laws are vital to protecting businesses and consumers, and funding ensures claims like this can proceed robustly.”

Exton Advisors specialises in advising claimants on securing Litigation Funding Agreements (LFAs). In this instance, their expertise ensured that the PCR could negotiate terms aligned with market standards, which are often complex in high-stakes collective actions.

Legal Expertise Behind the Claim

Dr Stasi’s legal team is led by Scott+Scott, a leading international law firm with a strong reputation in collective actions. Partner James Hain-Cole emphasised the importance of funding in such cases: “LFAs have evolved significantly since the collective action regime’s inception. Exton Advisors’ experience gave us a competitive advantage, ensuring that funding was secured efficiently and transparently.”

Wider Implications for the Class Action Landscape

This case arrives at a time of heightened activity in the UK’s collective action sphere. The Competition Appeal Tribunal has become a focal point for claims against major corporations accused of abusing market dominance.

If successful, the claim could lead to significant financial compensation for affected businesses and set a precedent for how dominant technology firms are held accountable. It also underscores the growing reliance on collective action regimes to challenge anti-competitive practices, a trend bolstered by litigation funding.

The Future of Competition Enforcement

Dr Stasi commented on the broader impact of the case: “This claim is about ensuring a fair and competitive market that benefits businesses and consumers alike. It’s not just about Microsoft—it’s about reinforcing the principles of competition law in the digital economy.”

As the case progresses, it will likely attract widespread attention, given the potential implications for both the technology sector and the broader enforcement of competition laws. A ruling in favour of the claimants could open the door to similar actions against other dominant players, further shaping the regulatory landscape for digital markets.