Microsoft avoids formal EC antitrust investigation into licensing abuses by reaching settlement with CISPE • The Register

A group of 27 cloud computing providers have reached a settlement of a complaint filed with the European Commission regarding alleged anti-competitive conduct related to the costs of running Microsoft software in their data centers.

The deal, which will remain secret, was voted on this afternoon by members of the Cloud Infrastructure Service Provider of Europe (CISPE) trade group, made up of 26 companies in Europe and Amazon Web Services (AWS), meaning Microsoft has managed to avoid more scrutiny and a potential court date with regulators.

The formal antitrust complaint was filed in November 2022 with the European Commission and concerned the higher costs of purchasing and running Microsoft software in clouds other than Azure, as well as the need for technical changes to run some software on competing cloud services.

Microsoft already tried to resolve the complaint last May, but CISPE told us it rejected the offer because it was “quite poor and very far from what we agree to… we have minimum requirements.”

These minimum requirements appear to have already been met. According to CISPE, the two parties have signed a Memorandum of Understanding under which Microsoft “committed to making certain changes to address the claims raised by CISPE’s European members, and as a result, CISPE will withdraw its complaint against Microsoft.”

It is worth noting that AWS has been excluded from the negotiations and, like Google Cloud Platform and AliCloud, “will not benefit from or be bound by these terms.”

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

These features will include a multi-session virtual desktop infrastructure based on Windows 11, free extended security updates, and consumption-based licensing for SQL Server.

CISPE believes that through “cooperation” European cloud providers will be able to offer applications and services on their infrastructure.

CISPE will also establish a European Cloud Observatory to monitor the “development and ongoing evaluation” of Azure Stack HCI. It will involve Microsoft and cloud infrastructure operators in the region, making “periodic public evaluations, reports and recommendations related to the implementation of the agreement and ensuring fair cloud software licensing.”

The clock is ticking, and Microsoft has nine months to “fulfill its commitment to deliver the Azure Stack HCI product for Hosters or otherwise resolve the software licensing issues. If, after that period, CISPE finds that Microsoft has not fulfilled its commitments related to the promised changes, it will refile the complaint.”

The trade association added: “As part of the agreement, Microsoft will pay CISPE a lump sum contribution to cover the costs of its litigation and fair software licensing campaigns over the past three years.”

In a statement sent to RegisterMicrosoft CEO Brad Smith said: “After more than a year of working with CISPE and its European members, I am pleased that we have not only addressed their concerns of the past, but together we have charted a path forward that will bring even greater competition to the cloud computing market in Europe and beyond.”

Simon Hansford, former CEO of UKCloud, said:

“While this agreement between Microsoft and the EU’s cloud services trade body CISP may seem like a step forward, if it is a private agreement, it raises concerns about the lack of transparency for the wider market. A narrow approach would do little to address the fundamental problems that hinder competition in cloud services.

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

“Regulators must now step in decisively to protect consumer interests and support a healthy cloud ecosystem. The CMA’s investigation in the UK provides a great opportunity to learn from the potential limitations of the CISP agreement and implement strong, transparent rules 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 rather than vendor loyalty,” he added. ®