Microsoft in discussions with CISPE to remedy ‘unfair’ cloud software licensing practices

Microsoft has opened discussions with the Cloud Infrastructure Service Providers in Europe (CISPE) trade body with a view to resolving concerns about how customers that run the tech giant’s online productivity tools on its competitors’ public clouds are charged.

CISPE confirmed the move in a statement that said the two entities have opened discussions to address the non-profit trade body’s ongoing concerns about Microsoft’s “unfair software licensing” practices that it claims penalise European cloud users for wanting to run software they own in other public clouds.

“The process is at an early stage, and it remains uncertain whether these discussions will yield effective remedies to the alleged anti-competitive practices,” said CISPE, in a statement. “To ensure swift and effective progress, CISPE has stipulated that substantive progress must be achieved in the first quarter of 2024.”

News of the discussions follows the filing of a formal complaint by CISPE against Microsoft in November 2022 with the European Commission’s Directorate-General for Competition (DG Comp), which saw it urge the organisation to open an investigation into the firm’s alleged anti-competitive licensing practices.

Furthermore, research published by CISPE in June 2023 suggested that European enterprises and public sector organisations are spending “billions of pounds extra each year” to run software they own in the Microsoft Azure public cloud.

In a statement CISPE released to announce the raising of its complaint to DG Comp last year, the organisation said Microsoft’s behaviour on this front is “irreparably damaging the European cloud ecosystem and depriving European customers of choice in their cloud deployments”, adding: “CISPE feels it has no option but to become a formal complainant and to urge the European Commission to act.”

According to CISPE secretary general Francisco Mingorance, its decision to involve DG Comp was instrumental in getting Microsoft to agree to start discussions about how to resolve the situation.

“Every passing day without resolution further undermines the viability of Europe’s cloud infrastructure sector and restricts the cloud options available to European customers,” said Mingorance.

“We are supportive of a fast and effective resolution to these harms, but reiterate that it is Microsoft [that] must end its unfair software licensing practices to deliver this outcome.

Computer Weekly contacted Microsoft for a comment and was told the firm “continues to work constructively with CISPE to resolve concerns raised by European cloud providers,” by a company spokesperson.

CISPE is not the only organisation that has put Microsoft’s software licensing practices under the microscope of late. In October 2023, the regulator Ofcom devoted several pages of its 254-page report on the inner workings of the UK cloud infrastructure market to examining Microsoft’s behaviour in this area.

The report stated, at the time, that Microsoft disputed the “veracity of the practices as alleged in the submissions” of cloud market stakeholders who alleged the firm makes it “unattractive for customers to use some Microsoft software on non-Microsoft cloud infrastructure”.