Microsoft has nine months to stop another antitrust battle from escalating

Microsoft has reached a settlement with an industry group backed by European cloud infrastructure providers, easing an antitrust battle that could have dragged on for years and resulted in fines. But if Microsoft fails to uphold its end of the bargain in the next nine months, the group has vowed to renew its antitrust complaint with the European Commission.

The group, Cloud Infrastructure Service Providers in Europe (CISPE), has agreed to withdraw its 2022 complaint to the European Commission, in which it accused Microsoft of “irreparably damaging the European cloud ecosystem and depriving European customers of cloud deployment choices,” arguing at the time that Microsoft’s licensing terms “deepen the harm and introduce new forms of tying, locking in and depriving customers of choice.”

Under the terms of the new agreement, Microsoft will enable European cloud service providers to offer their applications and services on local cloud infrastructures, CISPE reports. The group complained that Microsoft was unfairly locking in customers and pushing out competitors by charging a “tax” on popular Microsoft products used outside of its own cloud service, Azure. With the new version of Azure Stack HCI for European cloud providers announced in the agreement, customers of those other cloud providers will get access to a Windows 11-based virtual desktop infrastructure, free extended security updates, and pay-as-you-go licensing for SQL Server.

Microsoft will also pay CISPE an undisclosed amount to cover the costs of its lawsuits and fair software licensing campaigns over the past three years.

The group also said it would establish an independent European Cloud Observatory (ECO), made up of Microsoft, cloud infrastructure providers in Europe and European customer associations. The ECO will regularly issue assessments, reports and recommendations on how to implement the agreement. Microsoft will also pay CISPE an undisclosed amount to cover the costs of litigation and fair software licensing campaigns over the past three years. Reuters Agency the transaction was reported to be worth many millions.

CISPE also said it would not file or support other complaints relating to the settlement, although it may still comply with regulators’ requests for information.

The group lists Amazon Web Services along with several smaller European providers among its members, although it said AWS has been excluded from the negotiations. AWS, Google Cloud Platform and AliCloud are not included in the settlement.

CISPE Secretary General Francisco Mingorance called the agreement “a significant victory for European cloud service providers”

CISPE Secretary General Francisco Mingorance called the deal “a significant victory for European cloud providers” in a statement accompanying the announcement. However, another Amazon-affiliated group that has criticized Microsoft’s cloud licensing practices criticized the deal. Ryan Triplette, executive director of the Coalition for Fair Software Licensing, said in a statement: “This settlement is the latest attempt by Microsoft to avoid regulatory scrutiny without addressing underlying anticompetitive practices that impact millions of cloud customers around the world. Even with this agreement, Microsoft will continue to use its unfair software licensing practices to limit choice, raise costs, and lock in customers.”

Microsoft CEO Brad Smith said in a statement that the company has been working with CISPE for more than a year and “We are pleased that we have not only addressed their concerns from the past, but together we have also forged a path forward that will further increase competition in the cloud computing market in Europe and beyond.”