Google and AWS: Linux too hard, so customers move to Azure (2025)

When moving to the cloud, companies with significant investments in Microsoft infrastructure wares simply can't afford to rewrite everything for Linux, so they end up migrating to Azure to dodge the markups Redmond charges for running its server software in competitors' clouds.

Or so say both Amazon and Google in their latest submissions to the Competition and Markets Authority’s investigation into the health of the UK cloud market. The upshot, they claim, is that customers face the devil's choice of migrating to Azure, or paying many times more to run their Windows and SQL Server-based apps on AWS or Google's cloud platform.

The issue stems from changes to Microsoft's cloud licensing practices some years back. Customers used to be able to use regular software licenses to host Microsoft server software on outsourced hardware. But in 2019, Microsoft began requiring new, separate licenses to host virtualized versions of these servers within Amazon, Google, and Alibaba's clouds – three businesses Microsoft classified as "listed providers."

As a result, customers must pay up to four times more to run Windows Server VMs on Google Cloud Platform or AWS, making GCP “less competitive than on Azure,” Google told the CMA.

So why not just port everything over to Linux and tell Redmond to get stuffed? Because, as the Chocolate Factory pointed out, traditional enterprise customers don’t start from scratch when switching to the cloud, and many are already “highly dependent on Microsoft Windows."

The CMA’s report says:

“Google said that for companies that have built a dependency on Windows Server and/or SQL Server, it would take years and years to modernise to Linux after migrating as they would essentially need to rewrite all the Microsoft-based applications that they have accumulated over the years which is very challenging for most enterprises."

Examples of customers going through this process, as outlined by Google without mentioning any names, “took several years, came at significant expense to those customers, and would not have been possible for most customers due to lack of in-house software engineering resources.”

“Given Microsoft’s licensing practices, Google considered that it is not competitive for IaaS workloads for traditional enterprises with a material Windows footprint,” the report adds.

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The pricing issue means customers that went all in with Windows Server on-prem are “denied effective competitive choice or innovative alternatives” when going into the cloud, according to Google's submission to the CMA.

Google told the CMA that 70-80 percent of Azure’s revenue comes from customers using Windows Server and SQL Server, demonstrating that they are a "critical part of the cloud market."

AWS, which has estimated that 50 percent of customers would choose to migrate to workloads to clouds other than Microsoft Azure if the licensing price disparity was reduced, agreed that switching to Linux is not an option for many customers.

A separate CMA report which collated AWS talking points states:

“AWS said that it is possible for certain workloads to re-architect and rework onto Linux but this is relatively rare as it is costly to the customer and takes many years.

"For example, there are applications that only run on Microsoft Windows Server and customers using those cannot shift their workloads onto Linux. AWS said that in many scenarios it is simply not economically feasible for a customer to move away from Microsoft’s productivity software.”

Both Google and AWS want the CMA to knock down what they see as the Microsoft pricing hurdle, and the CMA has already said it in its preliminary ruling into the health of the UK cloud market that Microsoft may well have harmed comptition.

Naturally, Microsoft thinks there's nothing wrong about using its massive installed base to keep customers in its orbit when they move to the cloud, and claims to be walking a precise tightrope with its cloud pricing. In its comments to the the regulator, the CMA’s report recounts:

“Microsoft said that it is very careful about the pricing of its SPLA – while it does not want to charge too little for the use of its software, if its software was too expensive it would create incentives for large providers to move their customers off Microsoft software and onto an alternative software platform."

The CMA’s final decision report is due on July 4, when it will likely propose hotly contested remedies.

Other issues at hand include egress fees and technical barriers to moving cloud services. The CMA - which itself benefits from committed spend discounts - said it saw no problem in this part of the market. Smaller cloud rivals disagree, claiming it skews competition in favor of hyperscalers. ®