By Foo Yun Chee

BRUSSELS (Reuters) -Microsoft has clinched a 20-million-euro ($21.7 million) deal to settle an antitrust complaint about its cloud computing licensing practices, averting an EU antitrust investigation and potential hefty fine.

Cloud services organisation CISPE, whose members include Amazon and a score of small EU cloud providers, complained to the European Commission in late 2022 alleging that contractual terms imposed by Microsoft on Oct. 1 were harming Europe’s cloud computing ecosystem.

Microsoft ranks behind market leader Amazon in the multibillion-dollar cloud computing sector but ahead of Alphabet’s Google. The industry has drawn antitrust scrutiny on both sides of the Atlantic.

“After working with CISPE and its European members for more than a year, I am pleased that we’ve not only resolved their concerns of the past, but also worked together to define a path forward that brings even more competition to the cloud computing market in Europe and beyond,” Microsoft President Brad Smith said.

Microsoft will develop a product allowing CISPE’s members to run Microsoft software on their platforms on the U.S. tech giant’s Azure cloud infrastructure with prices equivalent to Microsoft’s prices, CISPE said. It has nine months to deliver.

Microsoft will also compensate CISPE members for lost revenues related to their licensing costs over the last two years, the group said. It did not disclose financial figures.

Microsoft has offered about 20 million euros in total, two people with direct knowledge of the matter told Reuters.

The settlement does not include Amazon Web Services (AWS), Google Cloud Platform and AliCloud, prompting criticism from the first two companies.

“We continue to stand with the growing number of customers, providers, and regulators globally who are calling on Microsoft to end its discriminatory practices for all customers,” an AWS spokesperson said.

The head of Google Cloud said he hoped regulators elsewhere would continue to look into Microsoft’s licensing practices

“Many regulatory bodies have opened inquiries into Microsoft’s licensing practices, and we are hopeful there will be remedies to protect the cloud market from Microsoft’s anti-competitive behavior,” Amit Zavery said.

“We are exploring our options to continue to fight against Microsoft’s anti-competitive licensing in order to promote choice, innovation, and the growth of the digital economy in Europe.”

CISPE said it would now withdraw its EU complaint and would not start or support complaints on these issues in Europe and elsewhere.

“This agreement will provide a level playing field for European cloud infrastructure service providers and their customers,” CISPE Secretary General Francisco Mingorance said.

($1 = 0.9240 euros)

(Reporting by Foo Yun Chee; Editing by Christina Fincher and Mark Potter)

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