Microsoft's recent agreement with the Cloud Infrastructure Services Providers in Europe (CISPE) marks a pivotal moment in the European cloud computing landscape. This settlement, reached after prolonged negotiations, aims to address longstanding concerns over Microsoft's cloud licensing practices and to foster a more competitive environment for European cloud providers.
The contention between Microsoft and CISPE centers on allegations that Microsoft's licensing terms were anti-competitive, particularly disadvantaging European cloud providers. CISPE, representing numerous independent European cloud services, filed a formal complaint with the European Commission in November 2022, accusing Microsoft of imposing unfair contractual terms that harmed Europe's cloud computing ecosystem. (cispe.cloud)
A significant point of contention was Microsoft's 2019 licensing changes, which made it more expensive to run Microsoft software on rival cloud platforms. This move was perceived as an attempt to lock customers into Microsoft's Azure platform, thereby stifling competition. (techcrunch.com)
In response to these challenges, Microsoft and CISPE agreed to new commercial terms in July 2025. This revised agreement allows qualified CISPE members to offer Microsoft software to their customers on a pay-as-you-go basis through the CSP-Hoster (CSP-H) program, with pricing conditions more comparable to those of Microsoft's own Azure platform. (datacenterdynamics.com)
Furthermore, other regulatory bodies continue to scrutinize Microsoft's cloud licensing practices. In April 2024, reports emerged that South Africa's antitrust agency was set to investigate Microsoft over its cloud computing licensing practices, indicating that concerns about Microsoft's market behavior are not confined to Europe. (reuters.com)
However, the exclusion of major cloud providers and ongoing criticism suggest that challenges remain. The effectiveness of the agreement will largely depend on Microsoft's ability to fulfill its commitments and the vigilance of regulatory bodies in ensuring fair competition in the cloud computing sector.
In conclusion, while the Microsoft-CISPE agreement marks progress in addressing anti-competitive concerns, it also highlights the complexities of regulating a rapidly evolving and highly competitive industry. The coming months will be crucial in determining whether this settlement leads to meaningful change or if further regulatory intervention will be necessary.
Source: Techzine Global Microsoft and CISPE reach agreement on cloud licensing
Background of the Dispute
The contention between Microsoft and CISPE centers on allegations that Microsoft's licensing terms were anti-competitive, particularly disadvantaging European cloud providers. CISPE, representing numerous independent European cloud services, filed a formal complaint with the European Commission in November 2022, accusing Microsoft of imposing unfair contractual terms that harmed Europe's cloud computing ecosystem. (cispe.cloud)A significant point of contention was Microsoft's 2019 licensing changes, which made it more expensive to run Microsoft software on rival cloud platforms. This move was perceived as an attempt to lock customers into Microsoft's Azure platform, thereby stifling competition. (techcrunch.com)
Terms of the Agreement
Under the memorandum of understanding signed in July 2024, Microsoft committed to several key actions:- Product Development: Microsoft agreed to develop an enhanced version of Azure Stack HCI tailored for European cloud providers. This product, known as Azure Stack HCI for Hosters, is designed to offer features such as multi-session virtual desktop infrastructure based on Windows 11, free Extended Security Updates (ESU), and pay-as-you-go licensing for SQL Server. (cispe.cloud)
- Financial Compensation: Microsoft agreed to compensate CISPE members for lost revenues related to licensing costs over the previous two years. While the exact figures were not disclosed, reports suggest the settlement amounted to approximately €20 million. (reuters.com)
- Monitoring and Compliance: An independent European Cloud Observatory (ECO) was established to oversee the implementation of the agreement. This body includes representatives from Microsoft, European cloud infrastructure vendors, and customer associations, tasked with making periodic public assessments and recommendations. (cispe.cloud)
Implementation Challenges
Despite the agreement, the path to implementation has encountered obstacles. By February 2025, the European Cloud Competition Observatory (ECCO) rated Microsoft's progress as "Amber," indicating that the company was off track in meeting its commitments. Concerns were raised about the development of the Azure Stack HCI for Hosters product and the competitiveness of Microsoft's Service Provider License Agreement (SPLA) program. (datacenterdynamics.com)In response to these challenges, Microsoft and CISPE agreed to new commercial terms in July 2025. This revised agreement allows qualified CISPE members to offer Microsoft software to their customers on a pay-as-you-go basis through the CSP-Hoster (CSP-H) program, with pricing conditions more comparable to those of Microsoft's own Azure platform. (datacenterdynamics.com)
Exclusion of Major Cloud Providers
Notably, the agreement excludes major cloud providers such as Amazon Web Services (AWS), Google Cloud Platform, and AliCloud. These companies were not part of the negotiations and will neither benefit from nor be bound by the terms of the settlement. This exclusion has drawn criticism, with AWS stating that the settlement does nothing for the vast majority of Microsoft customers who are still unable to use the cloud provider of their choice. (theregister.com)Ongoing Criticism and Regulatory Scrutiny
Despite the settlement, criticism persists. Ryan Triplette, Executive Director of the Coalition for Fair Software Licensing, described the agreement as "more smoke and mirrors from Microsoft," suggesting that the company is attempting to avoid regulatory scrutiny without addressing the underlying anti-competitive practices. (datacenterdynamics.com)Furthermore, other regulatory bodies continue to scrutinize Microsoft's cloud licensing practices. In April 2024, reports emerged that South Africa's antitrust agency was set to investigate Microsoft over its cloud computing licensing practices, indicating that concerns about Microsoft's market behavior are not confined to Europe. (reuters.com)
Implications for the European Cloud Market
The agreement between Microsoft and CISPE represents a significant development in the European cloud market. By addressing some of the concerns raised by European cloud providers, the settlement has the potential to foster a more competitive environment and support digital sovereignty in Europe.However, the exclusion of major cloud providers and ongoing criticism suggest that challenges remain. The effectiveness of the agreement will largely depend on Microsoft's ability to fulfill its commitments and the vigilance of regulatory bodies in ensuring fair competition in the cloud computing sector.
In conclusion, while the Microsoft-CISPE agreement marks progress in addressing anti-competitive concerns, it also highlights the complexities of regulating a rapidly evolving and highly competitive industry. The coming months will be crucial in determining whether this settlement leads to meaningful change or if further regulatory intervention will be necessary.
Source: Techzine Global Microsoft and CISPE reach agreement on cloud licensing
