Microsoft avoids formal antitrust EC probe over abusive licensing claims by settling case with CISPE

Pays 'lump sum,' setting up new Azure Stack for hosters and more but some concerned about the private deal

A group of 27 cloud providers have agreed to settle the complaint they lodged with the European Commission over alleged anti-competitive behavior related to the cost they pay to run Microsoft's software in their datacenters.

The agreement, which will remain confidential, was voted on this afternoon by the members of the Cloud Infrastructure Service Provider of Europe (CISPE) trade group, comprised of 26 firms in Europe and Amazon Web Services (AWS). It means Microsoft has managed to avoid greater scrutiny and a potential date with the regulators.

The formal competition complaint was filed in November 2022 with the EC and pertained to the higher cost of running of acquiring and running Microsoft software in clouds other than Azure, along with technical adjustments needs to run some programs on rival cloud services.

Microsoft has already tried to resolve the complaint in May last year, but CISPE told us it rejected the offer because it was "pretty paltry and very far short of anything we consent acceptance of… we have minimum requirements."

Those minimum requirements now appear to have been sated. According to CISPE, a Memorandum of Understanding was signed by both parties under which Microsoft has "committed to make certain changes to address the claims made by European CISPE members and, as a result, CISPE will withdraw its complaint against Microsoft."

Of note is that AWS was excluded from the negotiations, and it, along with Google Cloud Platform and AliCloud, will "neither benefit nor be bound by these terms."

"Central to the agreement is a collaboration between the parties to release an enhanced version of Azure Stack HCI for European cloud providers (Azure HCI Stack for Hosters) to offer features that Microsoft customers using Azure Stack HCI enjoy today," CISPE added.

Such features will include multi-session virtual desktop infrastructure based on Windows 11; free extended security updates; and pay-as-you-go licensing for SQL Server.

CISPE reckons the "collaboration" will let European cloud providers offer applications ands services on their infrastructure.

CISPE will also set up a European Cloud Observatory to monitor the "development and ongoing evaluation" of the Azure Stack HCI. It will include Microsoft and cloud infrastructure operators in the region, making "periodic public assessments, reports and recommendations related to the implementation of the agreement and ensuring fair software licensing in the cloud."

The clock is ticking and Microsoft has nine months to "make good on its commitment to deliver the Azure Stack HCI for Hosters product, or to resolve software licensing issues in other ways. If, at the end of that period, CISPE determines that Microsoft has not fulfilled its obligations related to the promised changes, it will refile its complaint."

The trade association added: "As part of the agreement Microsoft will pay a lump-sum contribution to CISPE to reimburse the cost of litigation and campaigns for fair software licensing over the past three years."

In a statement sent to The Register, Microsoft President Brad Smith said: "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."

Simon Hansford, former CEO at UKCloud, said: "While this agreement between Microsoft and the EU cloud trade body CISP might seem like a step forward, if it is a private deal this raises concerns about a lack of transparency for the broader market. A limited approach would do little to address the fundamental issues hindering competition in cloud services.


"Customers across Europe deserve a truly level playing field. Microsoft's software licensing practices, as originally highlighted by CISP, are a prime example of how hyperscalers can create an unfair advantage. These practices lock customers in and stifle competition from other cloud providers.

"Regulators must now step in decisively to protect consumer interests and foster a healthy cloud ecosystem. The UK's CMA investigation presents a golden opportunity to learn from potential limitations of the CISP deal and implement strong, transparent regulations on software licensing, pricing structures, and data mobility. This will ensure a competitive landscape where businesses can choose the best cloud provider based on merit, not vendor lock-in," he added.

A spokesperson at AWS, told us: "Despite denying its licensing practices harm customers and competition, Microsoft is now making limited concessions for some CISPE members that demonstrate there are no technical barriers preventing it from doing what’s right for every cloud customer.

"Unfortunately, this settlement does nothing for the vast majority of Microsoft customers who are still unable to use the cloud of their choice in Europe and around the world. 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." ®

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