Restrictive licensing keeps businesses grounded in cloud vendor vortex

Microsoft named – again – by EU trade groups seeking to level the playing field

New research is highlighting the restrictive licensing practices deployed to prevent businesses from switching cloud providers.

A study, conducted by Savanta and funded by the Computer and Communications Industry Association (CCIA Europe), surveyed 1,242 IT decision-makers in France, Germany, Spain, the Netherlands, and the UK. The report found that there was potential in the cloud markets for considerable growth – only 22 percent of respondents described themselves as "fully in the cloud" – yet a desire for choice in cloud vendor was being held back by restrictive licensing terms.

Of those considering a switch of cloud vendor, 40 percent claimed existing licensing terms meant that on-premises licenses could not be taken to another vendor. A further 40 percent were worried about losing discounts.

Given that the CCIA board includes representatives from Google, Amazon, and Mozilla, the report's focus on Microsoft's practices is not surprising. It notes the dominance of the Windows giant in the public sector, with 65 percent of organizations using its productivity software. 58 percent of non-public organizations report using Microsoft's apps.

The report highlights the situation in the UK, where 65 percent of users of Microsoft's on-premises software said they expected to choose Azure. A third (32 percent) said that they had been offered cloud services for free.

The report stops short of directly pointing the finger at Microsoft. However, it notes that a UK organization's existing relationship with the company was a significant reason for not switching cloud providers. Just over half of respondents (55 percent) from the Netherlands gave existing licensing terms as a reason for not moving providers, while a similar amount in Germany said the same (52 percent.)

As well as the impact of licensing restrictions, familiarity with a given brand was also a strong driver, particularly in France. Nearly half (48 percent) of respondents in France were happy to stick with what they knew. However, the specter of licensing restrictions is never far away. According to the report, one in five organizations in France that have not considered switching blame existing licensing terms for their inertia.

Microsoft's software licensing practices have come under scrutiny in recent years. A complaint was lodged in 2022 by the Cloud Infrastructure Service Providers in Europe (CISPE) trade group. The company has attempted to mollify its critics with licensing changes, but its tweaks have been rejected.

Microsoft itself has marketed services to customers to say it is five times more expensive to run its software in clouds owned by AWS, Google or Alibaba.

CISPE, which has 27 full members including AWS, also drew attention to the report. CISPE's commentary was blunt: "CISPE members are forced to sell must-have Microsoft productivity software below cost to compete with Microsoft selling its own software on Azure. Discriminatory pricing is luring customers away from European providers to Microsoft."

A Microsoft spokesperson said: "We've made significant changes to our licensing globally based on discussions with partners and customers, and we will continue to actively listen to them and to regulators."

While the licensing changes made by Microsoft do not apply to the so-called 'listed providers' - Google, AWS, and Alibaba - they do apply to many other, smaller cloud providers, who account for a much smaller proportion of the cloud market. ®

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