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Microsoft among software titans under spotlight for restrictive licensing

US campaign group forms as customers complain of lock-in, unclear terms, problems using wares in cloud

Campaign group the Coalition for Fair Software Licensing (CFSL) has launched in the US to tackle the "restrictive terms" and anticompetitive business practices that "lock-in" customers and "impedes" a move to the cloud.

The group is spearheaded by Ryan Triplette, executive director, who started consultancy Canary Global Strategic in 2017 and was formerly a director of government relations at Intel. Members of the Coalition operate in multiple sectors including financial services, healthcare and technology.

"Cloud customers around the world have long been subjected to repeated financial harm as a result of legacy providers' restrictive software licensing practices," he says in a statement.

"After hundreds of conversations with affected customers, the Coalition for Fair Software Licensing is proud to endorse the Principles of Fair Software Licensing. These principles represent the solution that will end abusive licensing tactics in the cloud and ensure the continued growth, adoption, and diversification of cloud services," Triplette adds.

This nine-point code (here) was devised by the Cloud Infrastructure Services Providers in Europe (CISPE) group and exported to the US.

"Unfair software licensing practices in the cloud are a global issue," CISPE said. "We encourage customers around the world confronted with unfair software licensing practices to consider the Principles as a powerful framework for positive change."

According to a poll of 250 plus C-suite execs, commissioned by the Coalition, 90 percent said licensing terms for software should be clearer; 88 percent want to able to bring their previously purchased software to the cloud; and 89 percent said they should be allowed to run on-premises wares in the cloud.

Almost two-thirds said restrictive software licensing Ts&Cs reduce their ability to use services that may lower overall IT costs, and 84 percent think customers should be protected from "audits that lock them into the providers' software while extracting higher fees."

"These practices increase cost and limit choice, they impede cloud market growth and innovation for businesses looking to introduce new services," said CFSL, adding customers are concerned about speaking out publicly for fear of "retaliatory behavior from software providers."

Nobody wants the compliance team from Microsoft or Oracle knocking at the door.

Craig Guarente, founder and CEO at consultancy Palisade Compliance, said some legacy software houses are trying to "extend their current on-premises dominance into the cloud market through aggressive and retractive contracts, licensing terms and software audits."

"While many promote 'cloud freedom', in actuality they are employing tactics designed to lock out competition and innovation while increasing profits for themselves at the expensive of their customers."

The byzantine nature of software licensing is not new, a whole sub industry of software asset management sprang up to profit from steering customers towards more appropriate licenses. Yet in the era of the cloud, where in theory costs are supposed to be more transparent, the behavior of companies including Microsoft has come under the microscope.

Highlighting the CISPE code is one thing but legal action is what will make the vendors sit up and take notice, and this is already happening in Europe with a multitude of companies, including OVH and others, stepping up to complain to the European Commission about Microsoft.

The threat of possible action from European competition regulators forced the software giant in May to say it will amend some licensing and cloud policies, but rival cloud players aren't convinced.

Some who asked to remain anonymous told The Register the changes will fail to "move the needle" and that they also ignore Microsoft's "other problematic practices."

"We are now waiting to see the concrete implementation conditions of these resolutions and remain committed to defending a level playing field for the European cloud ecosystem," an OVH spokesperson told us at the time.

Legislation in the US is being drafted by Senator and Michigan Democrat Gary Peters that is designed to make software licenses less restrictive, including in how the software operates with rivals' products. ®

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