The recent agreement between the Cloud Infrastructure Services Providers in Europe (CISPE) and Microsoft has triggered a significant debate within the European cloud ecosystem, raising fundamental questions about fairness, competition, and the route to a genuinely open cloud market. At the heart of the issue lies a $22 million deal—brokered in the wake of antitrust tensions—that grants CISPE members preferential pricing for Microsoft's core cloud products, including Windows Server and SQL Server, when delivered via their own infrastructure. While this move is heralded by those involved as a “significant breakthrough,” critics warn that it may do more to entrench existing market power than to democratize access to Microsoft’s essential cloud infrastructure.
Microsoft’s dominance in the European cloud computing sector has long been a lightning rod for complaints by both independent cloud service providers and regulatory bodies. These complaints typically centre on Microsoft’s licensing practices, which, critics argue, penalize customers seeking to run Microsoft software on non-Azure infrastructure. Companies wishing to host Microsoft’s operating systems or database technologies with rival providers often face higher costs, diminishing competitive choice and making it challenging for smaller or local cloud players to compete on price or functionality.
The European Commission’s Directorate-General for Competition (DG Comp) has investigated these claims at the behest of voices like CISPE, which represents a broad coalition of European cloud service organizations. In November 2022, CISPE lodged a formal complaint with the Commission, urging deep scrutiny of Microsoft’s licensing terms and alleging anti-competitive conduct.
Moreover, the agreement is open both to existing and “prospective” CISPE members, and there is a stated commitment from Microsoft to review the initiative within 12 months, suggesting that a broader, future rollout is possible. CISPE secretary general Francisco Mingorance framed the deal as a decisive blow against unfair licensing, declaring it would “ensure a level playing field” for European providers and empower EU customers to find cloud solutions that address sovereignty, compliance, and economic requirements.
Ryan Triplette, executive director of the Coalition for Fair Software Licensing, insists the agreement is a classic distraction tactic by Microsoft: “Every stalling tactic has just bought Microsoft more time to lock in customers with restrictive and anti-competitive licensing practices... This is more smoke and mirrors from Microsoft: offer weak concessions in an attempt to avoid regulatory scrutiny and disingenuously pretend these actions promote European competition.”
Similarly, Nicky Stewart, senior advisor to The Open Cloud Coalition, described the accord as “a bilateral deal between Microsoft and a subset of European providers,” warning that “opaque side deals cannot deliver a level playing field.” Stewart concluded that only “market-wide antitrust remedies” could offer real choice and fair pricing.
London-based cloud provider Civo’s CEO, Mark Boost, went even further, describing the agreement as raising “serious questions about fairness and transparency.” For Boost, the lack of clarity about eligibility—who can join CISPE, who sets those criteria, and who approves access—poses risks of market manipulation and private dealmaking. “Is this a private deal for a select few? Who decides who gets access, Microsoft or regulators?... it is easy to arrive at the assumption that this is a workaround that protects market power instead of challenging it.”
Microsoft echoed this inclusiveness, with Lars Johnson, its general manager of business planning, stating the initiative demonstrated Microsoft’s commitment to “empower our partners and customers with greater choice and control over their data,” and hinting at future innovation and expansion in collaboration with the European partner community.
Yet, critics suggest that the “openness” of joining CISPE does not automatically translate into a truly level market, particularly if the barriers to membership are non-trivial, or if the underlying licensing framework still preserves Microsoft’s ability to dictate cloud costs for non-members or smaller operators unable to join.
Past regulatory interventions—including an earlier 2019 European Commission review—found that licensing practices can easily become a gatekeeper function if not harmonized and made transparent. The risk, critics argue, is that even well-meaning “pilot deals,” struck with individual groups like CISPE, serve more to deflect antitrust momentum than to address the root cause: variable access to core technologies based on the power of private negotiation, not impartial market rule.
If membership in CISPE becomes too expensive, too exclusive, or otherwise impractical for the majority of the market’s smaller or innovative players, the agreement could ossify existing inequalities rather than resolve them. Moreover, even if Microsoft’s review leads to an expanded programme, the delay may be enough to let the company consolidate its cloud dominance further, posing fresh obstacles for regulators attempting to re-balance the industry down the line.
True progress may lie in converting the lessons of this deal into binding, market-wide rules—whether by Commission action, concerted industry lobbying, or both. Several commentators, including those at The Open Cloud Coalition and the Coalition for Fair Software Licensing, are already urging the European Commission to translate this “pilot” into statutory requirements, rather than a bespoke arrangement subject to change or closure at Microsoft’s discretion.
For CISPE, Microsoft, and most crucially, European cloud customers, the coming months will reveal whether this experiment can become a genuine blueprint for competitive, fair, and open cloud infrastructure—or whether it will join a long list of partial, short-lived solutions in the ongoing battle for digital sovereignty and software freedom in Europe.
Source: Computer Weekly CISPE criticised over securing preferential cloud pricing on Microsoft products for members | Computer Weekly
Preferential Pricing in the Context of Historic Tensions
Microsoft’s dominance in the European cloud computing sector has long been a lightning rod for complaints by both independent cloud service providers and regulatory bodies. These complaints typically centre on Microsoft’s licensing practices, which, critics argue, penalize customers seeking to run Microsoft software on non-Azure infrastructure. Companies wishing to host Microsoft’s operating systems or database technologies with rival providers often face higher costs, diminishing competitive choice and making it challenging for smaller or local cloud players to compete on price or functionality.The European Commission’s Directorate-General for Competition (DG Comp) has investigated these claims at the behest of voices like CISPE, which represents a broad coalition of European cloud service organizations. In November 2022, CISPE lodged a formal complaint with the Commission, urging deep scrutiny of Microsoft’s licensing terms and alleging anti-competitive conduct.
Anatomy of the Agreement: What Was Agreed, and Who Benefits?
In early 2024, the narrative shifted: CISPE and Microsoft entered negotiations, culminating in a June announcement that saw CISPE withdraw its antitrust complaint in exchange for a deal. The agreement’s central provision is that CISPE members will be able to host and resell Microsoft’s software at pricing “comparable to that offered by Microsoft Azure,” through the CSP-Hoster programme on a pay-as-you-go basis. Notably, participating parties aren’t required to disclose end-customer details to Microsoft—a privacy win CISPE touts as respecting client sovereignty.Moreover, the agreement is open both to existing and “prospective” CISPE members, and there is a stated commitment from Microsoft to review the initiative within 12 months, suggesting that a broader, future rollout is possible. CISPE secretary general Francisco Mingorance framed the deal as a decisive blow against unfair licensing, declaring it would “ensure a level playing field” for European providers and empower EU customers to find cloud solutions that address sovereignty, compliance, and economic requirements.
Criticism: Exclusion, “Smoke and Mirrors,” and Unanswered Questions
However, the announcement was met with a strong wave of criticism from outside the CISPE circle. The most common—and arguably the most damaging—charge is that the deal cements a two-tier ecosystem, benefiting only those who join CISPE while leaving the majority of Europe’s cloud customers and independent providers beholden to the old, restrictive terms.Ryan Triplette, executive director of the Coalition for Fair Software Licensing, insists the agreement is a classic distraction tactic by Microsoft: “Every stalling tactic has just bought Microsoft more time to lock in customers with restrictive and anti-competitive licensing practices... This is more smoke and mirrors from Microsoft: offer weak concessions in an attempt to avoid regulatory scrutiny and disingenuously pretend these actions promote European competition.”
Similarly, Nicky Stewart, senior advisor to The Open Cloud Coalition, described the accord as “a bilateral deal between Microsoft and a subset of European providers,” warning that “opaque side deals cannot deliver a level playing field.” Stewart concluded that only “market-wide antitrust remedies” could offer real choice and fair pricing.
London-based cloud provider Civo’s CEO, Mark Boost, went even further, describing the agreement as raising “serious questions about fairness and transparency.” For Boost, the lack of clarity about eligibility—who can join CISPE, who sets those criteria, and who approves access—poses risks of market manipulation and private dealmaking. “Is this a private deal for a select few? Who decides who gets access, Microsoft or regulators?... it is easy to arrive at the assumption that this is a workaround that protects market power instead of challenging it.”
Microsoft and CISPE: Pressing the Case for Broader Benefit
Faced with mounting criticism, CISPE’s leadership emphasized that the deal was reached after Commission action appeared unlikely and that it remains open to eligible European providers who join CISPE in the coming months. A CISPE spokesperson told Computer Weekly, “The agreement is open not only to current CISPE members, but eligible European cloud providers who join CISPE... [it] could benefit all European cloud infrastructure service providers in the near future.”Microsoft echoed this inclusiveness, with Lars Johnson, its general manager of business planning, stating the initiative demonstrated Microsoft’s commitment to “empower our partners and customers with greater choice and control over their data,” and hinting at future innovation and expansion in collaboration with the European partner community.
Yet, critics suggest that the “openness” of joining CISPE does not automatically translate into a truly level market, particularly if the barriers to membership are non-trivial, or if the underlying licensing framework still preserves Microsoft’s ability to dictate cloud costs for non-members or smaller operators unable to join.
Competitive Dynamics: Europe’s Cloud Market in the Balance
To understand the gravity of this debate, it’s crucial to review the broader competitive context. According to independent reports and recent filings to the European Commission, Microsoft, Amazon Web Services (AWS), and Google collectively dominate the European cloud infrastructure market, with Microsoft holding approximately 35-40% market share and Azure remaining the firm’s fastest-growing business division. Third-party providers, especially those with a focus on data sovereignty, regional compliance, or niche sector expertise, consistently report that Microsoft’s licensing strategy is a decisive competitive lever: by charging less for deploying Windows Server or SQL Server on Azure, it can price undercut even the most resourceful European rivals.Past regulatory interventions—including an earlier 2019 European Commission review—found that licensing practices can easily become a gatekeeper function if not harmonized and made transparent. The risk, critics argue, is that even well-meaning “pilot deals,” struck with individual groups like CISPE, serve more to deflect antitrust momentum than to address the root cause: variable access to core technologies based on the power of private negotiation, not impartial market rule.
A Closer Look at the CISPE-Microsoft Terms
While CISPE has published some high-level details, the granular mechanics of the revised pricing are not all public. What is clear from CISPE statements and industry reporting is:- CISPE members can now offer Microsoft software on a “pay-as-you-go” model via CSP-Hoster at pricing essentially indexed to that of Azure, thus potentially eliminating a major cost gap.
- All access to the terms is predicated on being (or becoming) a CISPE member; there is no guarantee that terms will automatically be made available to all European market participants in the future.
- The deal does not obligate CISPE members to disclose end-user specifics to Microsoft, alleviating some data sovereignty objections.
- Microsoft has committed to publicly reviewing the pilot’s impact after 12 months, which may result in broader eligibility or even a renegotiation of terms depending on the findings.
Risks and Potential Unintended Consequences
Despite initial optimism from CISPE and Microsoft, numerous risks and potential adverse consequences have become evident:- Market Fragmentation: By granting access only to CISPE members (even if membership criteria are said to be open), Microsoft risks recreating a fragmented market where only those inside the tent gain competitive pricing, deepening not closing the pricing gap for those outside.
- Regulatory Deferral: Some observers view the agreement as a tactic to delay more forceful regulatory action by the European Commission, as evidenced by the withdrawal of CISPE’s complaint. This could sap momentum for systemic reform and allow restrictive practices—albeit in slightly modified forms—to persist.
- Transparency Deficit: Opaque dealmaking and non-public eligibility standards can breed suspicion, both among competitors and customers. Without full transparency on pricing algorithms, decisionmaking processes regarding applicant acceptance, and broader rollout plans, trust in the initiative is likely to remain brittle.
- Precedent Setting: By settling regulatory grievances privately (even for a “pilot” programme), both CISPE and Microsoft may inadvertently empower other dominant vendors to pursue settlement over systemic remediation, making it harder for regulators to drive market-wide solutions.
Possible Benefits and Notable Strengths
While the deal’s critics are vocal, it bears mentioning that the agreement does bring tangible benefits:- Immediate Cost Relief for Qualifying Providers: Those who participate will have access to significantly reduced prices, potentially allowing them to compete more effectively with Azure and retain customers seeking multi-cloud or hybrid-cloud architectural flexibility.
- Privacy and Sovereignty Protections: The decision to absolve providers of any requirement to hand over customer data to Microsoft addresses a major pain point raised by European IT policy circles, which often stress the importance of local data control.
- Potential to Set New Benchmarks: Even if limited in scope, a successful pilot could pressure Microsoft—and its competitors—to normalize fairer, more transparent licensing models across regional boundaries, eventually benefiting the broader market.
- Flexibility for Rapid Market Evolution: By embedding a 12-month review clause, the deal maintains a degree of adaptability in response to market and regulatory feedback.
Critical Analysis: Is the Agreement Truly a Step Toward Fair Cloud Competition?
Much hinges on whether the CISPE-Microsoft arrangement evolves beyond its current cohort and becomes a germinal model for universal fair-pricing access. On the one hand, it demonstrates that collective bargaining—when conducted by a credible, organized trade body—can yield real, immediate concessions for a critical segment of the market. On the other, it underscores the fact that private deals still dominate the landscape of IT regulation, favoring entities with sufficient size or influence to negotiate.If membership in CISPE becomes too expensive, too exclusive, or otherwise impractical for the majority of the market’s smaller or innovative players, the agreement could ossify existing inequalities rather than resolve them. Moreover, even if Microsoft’s review leads to an expanded programme, the delay may be enough to let the company consolidate its cloud dominance further, posing fresh obstacles for regulators attempting to re-balance the industry down the line.
True progress may lie in converting the lessons of this deal into binding, market-wide rules—whether by Commission action, concerted industry lobbying, or both. Several commentators, including those at The Open Cloud Coalition and the Coalition for Fair Software Licensing, are already urging the European Commission to translate this “pilot” into statutory requirements, rather than a bespoke arrangement subject to change or closure at Microsoft’s discretion.
Forward-Looking Outlook: What Should Cloud Customers and Providers Watch For?
As the CISPE-Microsoft deal proceeds through its first year, stakeholders across the European cloud market should monitor several key factors:- Membership Growth and Accessibility: Will smaller or specialist providers be able to join CISPE easily, or will practical or financial obstacles persist?
- Price Parity and Transparency: Are the new terms truly on par with Azure, and will fully transparent pricing documentation be published?
- Regulatory Follow-Through: Will the European Commission re-engage with systemic reform, or does this pilot defer more forceful intervention?
- Customer Impact: Will end customers—especially public-sector agencies and SMEs—see reduced costs, greater flexibility, or more choices as a result?
- Potential for Expansion: How likely is it, realistically, that Microsoft will open the programme to all qualified European providers, rather than a CISPE-defined segment?
Conclusion: A Cautious Step, Not a Panacea
For now, the CISPE-Microsoft agreement is best seen as a cautious step toward cloud licensing reform rather than a panacea. It offers targeted relief for certain providers and their customers but falls short of enacting the broad, impartial change that the European cloud market needs to fulfill its potential as a hub of innovation, sovereignty, and customer-centricity. Without vigilant regulatory oversight, robust transparency mechanisms, and rapid opening of these new terms to the entire market, there is a substantial risk that this deal will ultimately entrench, not erode, Microsoft’s dominant position.For CISPE, Microsoft, and most crucially, European cloud customers, the coming months will reveal whether this experiment can become a genuine blueprint for competitive, fair, and open cloud infrastructure—or whether it will join a long list of partial, short-lived solutions in the ongoing battle for digital sovereignty and software freedom in Europe.
Source: Computer Weekly CISPE criticised over securing preferential cloud pricing on Microsoft products for members | Computer Weekly
