A recently agreed Memorandum of Understanding (MOU) between Microsoft and CISPE, a European cloud providers’ trade association, aimed to mitigate issues surrounding software licensing practices and resolve complaints lodged with the EU competition authorities. The complaints by CISPE accused Microsoft of engaging in anti-competitive practices, such as imposing higher fees for running Microsoft software on non-Microsoft infrastructure compared to its own Azure platform and creating technical barriers when using Microsoft programs on rival cloud services. The settlement intended to foster fairer competition and address these issues holistically.
Criticism from CISPE on Microsoft’s Progress
However, CISPE’s European Cloud Computing Observatory (ECCO) released a report that casts a shadow on this intended progress, indicating that Microsoft is falling short of fulfilling its obligations under the MOU. The report evaluates the MOU’s status as “Amber/Off-track” and highlights that two critical areas have earned a “Red status” due to insufficient progress. While Microsoft’s efforts in areas such as providing Flexible Virtualization Benefit Availability and Migration License Support have shown positive developments, major commitments like “Hoster Product Development and Service Provider Licensing Agreement Program Support and Sustained Competitiveness” lag significantly behind expectations.
CISPE expected that addressing these commitments would drive a competitive landscape for cloud services, urging advancements that level the playing field. Unfortunately, Microsoft’s recent licensing price modifications cast doubt on this commitment. For instance, there is a notable disparity between Microsoft’s Windows Server licensing costs under Service Provider Licensing Agreement (SPLA) and corresponding hourly PAYGO (pay-as-you-go) prices on Azure. This discrepancy is a key concern for CISPE members, as it reflects continued price-based discrimination despite the agreement meant to abolish such practices.
Price Discrepancies and Licensing Challenges
One of the primary objectives of the MOU was to secure the continuation of the SPLA licensing program for at least five years, aiming to provide a fair and competitive avenue for CISPE members to utilize Microsoft software without facing additional cost burdens. Nevertheless, Microsoft’s recent action to increase Windows Server prices for SPLA, while leaving Azure service prices untouched, appears contradictory to this crucial goal. This differential pricing strategy fuels concerns among CISPE members about true licensing fairness and its influence on market competitiveness.
The perceived injustice in Microsoft’s pricing structure showcases broader challenges in attaining a level playing field. CISPE members find raised Windows Server prices under SPLA discriminative, especially when there is no concurrent rise in analogous Azure service prices. The essence of the MOU was envisaged as protecting smaller cloud providers from unfair competition and ensuring equal opportunities in leveraging Microsoft software. The shift indicates a potential breach, signaling Microsoft’s reluctance to wholly embrace equitable licensing principles set forth by the agreement.
Hoster Product Development Lag
In another critical development area, “Hoster Product Development,” progress remains significantly off-track. Desperate expectations were pinned on Microsoft and CISPE engineer discussions where CISPE highlighted essential technical requirements for multi-tenant hybrid cloud functionalities. Despite shared perspectives, Microsoft’s development pace has not met anticipated benchmarks. CISPE asserts that Microsoft has shown reticence toward actualizing these technical specifications requisite for enabling effective multi-tenancy, posing a barrier to progress.
Addressing these technical stipulations remains crucial for CISPE, whose members rely on achieving parity with major industry players. Microsoft’s reluctance, perceived as a significant roadblock, hinders the broader aim to support competitive European cloud services. Adding to this challenge, Microsoft has pointed out that CISPE’s requirements may surpass initial engagements envisioned in the pilot, suggesting a mismatch between CISPE’s expectations and stipulated commitments. A specific product, Azure Local, stirs considerable concern among CISPE members due to fears it might necessitate an Azure presence, a move seen as counterproductive to fostering a competitive market environment.
ECCO’s Criticism and Broader Implications
ECCO has taken a critical stance against Microsoft’s approach, arguing that co-considering CISPE’s requirements alongside other unrelated product demands has led to delays and diminished prioritization. The vigorous focus on developing Azure Local risks deviating from MOU’s broader commitments, accentuating fair competition in European cloud services powered by Microsoft software. ECCO urges Microsoft to clarify whether Azure Local will meet the agreement’s inherent requirements or collaborate on suitable alternatives expeditiously.
The MOU, signed in July, mandates a nine-month period for Microsoft to demonstrate compliance, a deadline looming incapable of breaking CISPE’s patience. Should Microsoft fail to adhere rigorously, there’s a high likelihood of legal actions reigniting, emphasizing the distinct necessity of sincere compliance and swift deliverables to avoid litigation, complicating the partnership further.
Broader Market Concerns and Stakeholder Perspectives
Scrutinizing the broader market landscape, European cloud customers continue experiencing hurdles in securing fair software licensing terms from dominant global tech giants. Critics like Nicky Stewart from the Open Cloud Coalition highlight that settlements like the Microsoft-CISPE agreement remain inadequate in addressing market-wide fair licensing concerns. This sentiment underscores intrinsic difficulties confronting European cloud entities within current market dynamics dominated by large American tech corporations.
Adding to the complexity of the landscape, ECCO’s investigative report on Broadcom unveils further ongoing issues concerning software licensing in Europe. Broadcom, following its acquisition of VMware, faces adverse feedback for stern and unsuitable alterations imposed on VMware software license agreements. Despite the lack of formal probes by European competition bodies, discontent is palpable, prompting some VMware users to pursue legal actions to preserve former licensing terms or negotiate fairer new agreements.
Broadcom’s Licensing Tactics and Industry Response
Broadcom’s legal delaying tactics and perceived coercion, suggesting acceptance of new licensing constructs steeped in hefty fees and extensive commitments, have attracted severe condemnation. Most afflicted organizations with software heavily embedded into their systems and operations find Broadcom’s revised terms non-negotiable, coercing them into submission despite inherent power imbalances. In response to these complaints, Broadcom maintains that stability in customer retention springs from their simplified, standard licensure model.
These industry responses depict a disturbing trend of difficult negotiations and power plays within the software licensing field, leaving smaller entities underrepresented. ECCO’s observations further shine a light on the requirement for equitable licensing terms that major vendors should uphold to avoid exploitative practices.
Ongoing Struggles for Fair Software Licensing
A recently finalized Memorandum of Understanding (MOU) between Microsoft and CISPE, the trade association for European cloud providers, aims to address concerns over software licensing practices and resolve complaints submitted to the EU competition authorities. CISPE’s complaints about Microsoft claimed that the company was involved in anti-competitive behavior. Specifically, CISPE accused Microsoft of charging higher fees for running its software on non-Microsoft infrastructure compared to its own Azure platform. Additionally, they alleged that Microsoft created technical obstacles that hindered the use of its programs on competitor cloud services.
This agreement between Microsoft and CISPE seeks to promote fairer competition within the cloud services market. By addressing these issues more comprehensively, the settlement aims to create a more level playing field for all cloud service providers. Both parties hope that these measures will help mitigate the existing concerns and lead to more equitable business practices in the industry.
The settlement is significant as it signals a collaborative effort to resolve longstanding issues and improve the overall competitive landscape. By working together, Microsoft and CISPE aim to ensure that cloud services can be accessed and utilized without unfair limitations, ultimately benefiting consumers and businesses across Europe.
