Microsoft & CISPE have come to an agreement which takes some of the legal pressure off Microsoft and should lead to a more diverse cloud market…to a point.
Background
CISPE (the Cloud Infrastructure Service Providers in Europe) is, as its name suggests, a group comprised of, and working for, European Cloud hosting organisations including AWS, OVH, and Aruba.
In November 2022, CISPE filed a formal complaint with the European Commission about Microsoft’s “anti-competitive licensing practices” in the cloud. CISPE said:
“the new contractual terms imposed unilaterally by Microsoft on 1st October 2022 add new unfair practices to the list. Microsoft’s ongoing position and behaviours are irreparably damaging the European cloud ecosystem and depriving European customers of choice in their cloud deployments.”
The crux of the issue is that Microsoft’s licensing rules make it cheaper to run Microsoft workloads in Azure than any other cloud environment, thus giving them an unfair advantage against their competitors.
What’s happened now?
The two parties have signed a Memorandum of Understanding (MoU) where Microsoft have committed to make changes to address the claims and so CISPE have agreed to withdraw its complaint and also that they “will not initiate or support complaints on these issues in Europe or elsewhere”. Microsoft have also agreed to pay $22 million to CISPE to reimburse them for the last 3 years’ of “cost of litigation and campaigns for fair software licensing”.
Central to the agreement is Microsoft agreeing to release “Azure Stack HCI for Hosters”. This new Azure Stack HCI offering will include:
- Multi-session virtual desktop infrastructure based on Windows 11
- Free Extended Security Updates (ESU)
- Pay-as-you-go licensing for SQL Server
Enabling 3rd-party cloud providers to close the gap between their services and those available in Microsoft Azure – a key part of the complaint.
There is a clock ticking for Microsoft now, as changes must be made within 9 months. They must release this new offering and/or solve the issues another way within that timeframe otherwise the complaint will be refiled with the European Commission.
It must be noted that CISPE state:
“Amazon Web Services, a CISPE member, was excluded from these negotiations and it, along with Google Cloud Platform and AliCloud, will neither benefit from nor be bound by these terms”
This means Microsoft’s “Listed Provider” exclusion still applies to this change.
European Cloud Observatory (ECO)
This new body, established by CISPE and including Microsoft, will monitor the development of “Azure Stack HCI for Hosters” and the fairness of Microsoft’s cloud licensing.
Reception
Not everyone is happy with this outcome. It has been reported that Google made an offer to CISPE worth almost $500 million, comprised of licenses and cash, for them to continue their compliant against Microsoft.
Additionally, Google’s Head of Platform, Amit Zavery, has said:
“Microsoft’s playbook of paying off complainants rather than addressing the substance of their complaint hurts businesses and shouldn’t fool anyone“
while an AWS spokeperson stated:
“Microsoft selectively making these changes for some CISPE members shows that there are no technical barriers that prevent Microsoft from making its software more easily available to rival cloud providers”
What’s next?
The Azure Stack for Hosters product will enable cloud providers to offer new features and capabilities that are attractive to customers, which is good. The main issue that many people may have is that this agreement excludes Amazon AWS and Google Cloud Platform, so their customers are no better off than before.
While that is true, I think it is also representative of what I believe is CISPE’s main aim – to help boost the non-hyperscaler cloud market in Europe. They want to help companies like OVH, Irideos, and UpCloud more so than Amazon and Google.
This is certainly not the end of this story. The cloud is going to be a battleground for many years to come and so licensing and competitive advantages will be a key issue for some time…
Cloudy with a chance of Licensing 