Microsoft’s latest maneuver to address mounting regulatory and competitive pressures in the European cloud services market has set the stage for a potentially transformative chapter between US tech giants and EU infrastructure providers. By proposing a fresh set of commercial terms to the Cloud Infrastructure Service Providers of Europe (CISPE)—a consortium representing over 30 cloud operators including AWS and, since recently, Microsoft itself—the company hopes to stave off another round of litigation over its contentious licensing policies. This development marks an inflection point in a dispute with profound implications for cloud computing competition, digital sovereignty, and the future of software licensing on a global scale.
CISPE’s long-standing grievance centers on Microsoft’s licensing structures, which for years have tipped the competitive scales in favor of the company’s own Azure platform. At issue are extra charges imposed on running Microsoft software—such as Windows Server, Exchange, and SharePoint—on non-Azure clouds. These additional costs, described by critics as a "tax" on rival platforms, have hindered customer choice and challenged the business models of independent European cloud operators. The controversy intensified following Microsoft’s 2019 decision to dub AWS, Google Cloud, and Alibaba Cloud as “Listed Providers,” effectively making it costlier for customers to run Microsoft workloads anywhere other than Azure.
From CISPE’s perspective, these policies have amounted to anti-competitive practices that lock enterprises further into Microsoft’s technology ecosystem. The group’s November 2022 complaint to EU antitrust authorities was only the latest in a string of similar appeals from across the industry. Google, too, filed a parallel complaint, highlighting how Microsoft’s tactics drove up the total cost of ownership on its own cloud platform.
Yet, by mid-2025, the promised Azure Local solution had not materialized within the specified timeframe. This apparent shortfall in delivery sent CISPE and Microsoft back to the negotiating table to search for a viable contractual resolution. The latest proposal—submitted by Microsoft ahead of the memorandum-of-understanding (MoU) deadline in July—is being evaluated by CISPE members, with a decision expected to be announced in the coming weeks.
Microsoft’s practice of differentiating costs and rights depending on a cloud’s brand is now under the close watch of not just the EU’s competition authorities, but also regulators in the UK and the United States. The UK Competition and Markets Authority and the US Federal Communications Commission have both recently signaled greater scrutiny when it comes to cloud market concentration and software licensing arrangements, echoing concerns that have grown louder as more workloads move from customer-owned datacenters to public cloud environments.
From a technical perspective, the disparate pricing and licensing requirements mean that CIOs and IT buyers are forced to make strategic decisions based as much on vendor-imposed restrictions as on genuine technical differentiation or service quality. The result: increased lock-in, less innovation, and a cloud landscape that favors incumbents over upstarts or regionally-focused operators.
Several positives can be drawn from the direction of talks:
This has effectively pitted the cloud infrastructure arms of the Big Three—Microsoft, AWS, and Google—against each other, with European hosters and regulators acting as kingmakers. That Microsoft has been able to insert itself so deeply into a traditionally adversarial body is itself testament to its persistent, multi-pronged lobbying effort. But it also suggests a growing acceptance, within Europe, that coexistence with US tech power must be managed pragmatically, rather than through outright confrontation.
A central theme in these efforts is the need to protect the interoperability, portability, and neutrality of cloud infrastructure, ensuring that customers can move workloads freely and choose providers based on features and performance, not dictated by vendor lock-in or arcane licensing hurdles.
While some observers caution that heavier regulation could introduce new unexpected barriers—potentially stifling innovation or creating unintended complexity—the tide of political and customer sentiment in Europe is decisively moving towards stronger checks on Big Tech influence over the digital cloud ecosystem.
In the meantime, the EU will continue probing the cloud market for signs of anticompetitive behavior, and national regulators are expected to ramp up scrutiny of contractual “gotchas” that stifle competition under the guise of software innovation. It’s possible that other software vendors—IBM, Oracle, VMware—may be prompted to review and reform their own licensing policies if Microsoft’s model is forced to change.
For European customers, CIOs, and cloud architects, the upshot is clear: understanding the fine print of licensing agreements is now as essential as evaluating features, SLAs, or security postures when assessing cloud platforms. Vendor strategies will need to adapt to a new phase where trust, fairness, and regulatory compliance are as decisive as raw technical innovation.
The resolution of this dispute will either embolden regulators to demand further market reforms or reassure global cloud giants that compliance is possible through incremental, negotiated change. The eyes of the entire global tech industry are on Europe—what happens next will shape not only who controls the cloud, but also how technology, policy, and business will intersect as the era of digital infrastructure matures.
For now, it remains the job of CISPE, its members, Microsoft, and attentive regulators to ensure that this critical opportunity is seized—on terms that prioritize openness, fair competition, and the long-term interests of Europe’s digital future.
Source: theregister.com Microsoft offers EU cloud providers fresh commercial terms
The Roots of Discontent: Microsoft’s Licensing Practices Under Fire
CISPE’s long-standing grievance centers on Microsoft’s licensing structures, which for years have tipped the competitive scales in favor of the company’s own Azure platform. At issue are extra charges imposed on running Microsoft software—such as Windows Server, Exchange, and SharePoint—on non-Azure clouds. These additional costs, described by critics as a "tax" on rival platforms, have hindered customer choice and challenged the business models of independent European cloud operators. The controversy intensified following Microsoft’s 2019 decision to dub AWS, Google Cloud, and Alibaba Cloud as “Listed Providers,” effectively making it costlier for customers to run Microsoft workloads anywhere other than Azure.From CISPE’s perspective, these policies have amounted to anti-competitive practices that lock enterprises further into Microsoft’s technology ecosystem. The group’s November 2022 complaint to EU antitrust authorities was only the latest in a string of similar appeals from across the industry. Google, too, filed a parallel complaint, highlighting how Microsoft’s tactics drove up the total cost of ownership on its own cloud platform.
From Threat of Lawsuit to Negotiated Settlement
The lingering threat of legal action forced Microsoft to the bargaining table in mid-2024. An initial intention-to-settle saw the company agree to develop and offer a Europe-specific version of Azure Stack HCI (branded “Azure Local”) that would enable features previously reserved for Azure customers—such as multi-session Windows 11 virtual desktop, free extended security updates, and pay-as-you-go SQL Server licensing—to be made available for independent European hosters. This was viewed as a major concession that, in theory, would remove the technical and contractual hurdles faced by non-Azure cloud services operating in the EU.Yet, by mid-2025, the promised Azure Local solution had not materialized within the specified timeframe. This apparent shortfall in delivery sent CISPE and Microsoft back to the negotiating table to search for a viable contractual resolution. The latest proposal—submitted by Microsoft ahead of the memorandum-of-understanding (MoU) deadline in July—is being evaluated by CISPE members, with a decision expected to be announced in the coming weeks.
Analyzing the Commercial Offer: What’s Known and What’s Still Hidden
Details of Microsoft’s latest proposal remain under wraps, with CISPE refusing press inquiries about specific terms, citing the confidentiality of ongoing review. However, sources close to the negotiations have surfaced several key points:- Microsoft reportedly will no longer require service providers to send detailed lists of their customers—seen by many as both an administrative burden and a competitive intelligence overreach.
- A reduction in Service Provider License Agreement (SPLA) fees is on the table, addressing a particular sore point after Microsoft increased these fees by 10 percent in January 2025 (despite CISPE members believing their original 2024 settlement exempted them from such hikes).
- The agreement is rooted in commercial (contractual) concessions, rather than technical changes—meaning the structure and reach of Azure Local as a special offering remains an open question.
The High Stakes: Why This Dispute Resonates Across the Cloud Industry
It’s no exaggeration to say that how this standoff is resolved will influence the future of cloud computing in Europe and beyond. At stake is not simply the competitiveness of local providers, but broader questions of digital sovereignty, fair play, and the practical enforceability of antitrust principles in an era dominated by a handful of global technology titans.Microsoft’s practice of differentiating costs and rights depending on a cloud’s brand is now under the close watch of not just the EU’s competition authorities, but also regulators in the UK and the United States. The UK Competition and Markets Authority and the US Federal Communications Commission have both recently signaled greater scrutiny when it comes to cloud market concentration and software licensing arrangements, echoing concerns that have grown louder as more workloads move from customer-owned datacenters to public cloud environments.
From a technical perspective, the disparate pricing and licensing requirements mean that CIOs and IT buyers are forced to make strategic decisions based as much on vendor-imposed restrictions as on genuine technical differentiation or service quality. The result: increased lock-in, less innovation, and a cloud landscape that favors incumbents over upstarts or regionally-focused operators.
Key Strengths in Microsoft’s Approach—and Persistent Concerns
In fairness, Microsoft’s willingness to engage in negotiations with CISPE and to reevaluate its commercial policies in light of regional concerns is no small matter. Past incidents have shown that tech giants rarely respond with such agility unless faced with serious regulatory headwinds or loss of goodwill among their most strategic customers.Several positives can be drawn from the direction of talks:
- Potential Fee Reductions: The proposal to reduce SPLA fees—which had recently been hiked—addresses one of the most immediate and practical concerns for European hosters.
- Greater Data Privacy: Backing away from requirements to divulge customer lists not only reduces administrative complexity for CISPE members but also aligns with the EU’s stricter requirements on data handling and privacy.
- Dialogue over Litigation: By opting for structured negotiation instead of protracted litigation, both sides reduce uncertainty. This encourages investment and long-term planning by cloud infrastructure providers.
- Opacity and Lack of Detail: The current confidentiality surrounding Microsoft’s offer prevents independent verification of its scope or impact. Until the terms are made public—and tested in practice—fears will persist about potential loopholes or one-sided trade-offs.
- Sustainability of Commitments: A superficial or temporary price cut addresses symptoms but not root causes. Without comprehensive reform of Microsoft’s licensing logic—and a commensurate technical leveling of the playing field—there’s a risk these concessions could be reversed, or replaced with new hurdles, down the line.
- Fair Competition: If the new terms do not replicate, in practice, the technical and economic parity heralded by the promised Azure Local offering, then Microsoft may simply be “running out the clock” on meaningful reform. The contractual path might inadvertently codify rather than dissolve anticompetitive machinery.
- Multiple Complaints, Fragmented Approaches: The fact that both Google and AWS have separately complained about Microsoft’s practices highlights the scale of unease. Previous attempts at brokered settlements have been derailed by factional interests and Microsoft’s effective divide-and-conquer negotiation strategy.
The Boardroom Chess Game: CISPE, AWS, Google, and Microsoft
The dynamics inside CISPE have grown more complex over the past year. AWS, at one point a board member, stepped back after the decision to welcome Microsoft into the association, a move some saw as an attempt by Microsoft to influence proceedings from within. Meanwhile, Google’s efforts to form a united front with CISPE against Microsoft reportedly foundered when the group opted to pursue a settlement in mid-2024.This has effectively pitted the cloud infrastructure arms of the Big Three—Microsoft, AWS, and Google—against each other, with European hosters and regulators acting as kingmakers. That Microsoft has been able to insert itself so deeply into a traditionally adversarial body is itself testament to its persistent, multi-pronged lobbying effort. But it also suggests a growing acceptance, within Europe, that coexistence with US tech power must be managed pragmatically, rather than through outright confrontation.
Broader Context: The Cloud Market’s Growing Regulatory Spotlight
Europe’s hyperscale cloud market is undergoing a seismic regulatory shift. The European Commission has signaled its readiness to intervene more aggressively in digital markets, viewing cloud infrastructure as a foundational element of economic sovereignty akin to telecoms networks, energy grids, or national security infrastructure. This has contributed to an uptick in legal challenges, policy consultations, and new digital legislation like the EU Data Act and Digital Markets Act.A central theme in these efforts is the need to protect the interoperability, portability, and neutrality of cloud infrastructure, ensuring that customers can move workloads freely and choose providers based on features and performance, not dictated by vendor lock-in or arcane licensing hurdles.
While some observers caution that heavier regulation could introduce new unexpected barriers—potentially stifling innovation or creating unintended complexity—the tide of political and customer sentiment in Europe is decisively moving towards stronger checks on Big Tech influence over the digital cloud ecosystem.
Critical Analysis: Is Microsoft’s Move Enough?
For Microsoft’s latest initiative to achieve more than a tactical pause in hostilities, it must confront several hard realities:- Substance Over Symbolism: Only time—and lived experience by European hosters—will reveal whether the new commercial terms translate into genuine market access and competitive fairness. If core technical disparities remain, or if Microsoft retains the ability to unilaterally alter terms, long-term distrust will persist.
- The Precedent Question: Should the EU endorse a superficial fix that benefits only one group of providers, at one moment in time, it risks setting a precedent that powerful software vendors can negotiate bespoke carve-outs rather than meaningful, market-wide reform.
- Multicloud Realities: In a world where customers increasingly want flexibility across multiple clouds, the question of how software licensing travels across platforms is a universal one. Microsoft, as both a cloud provider and dominant software vendor, exerts outsize influence. If licensing costs and options for third-party clouds remain higher or more complex, true multicloud freedom is an illusion.
Looking Forward: What’s Next and What to Watch
A decision by CISPE on whether to accept Microsoft’s proposal is expected before the end of July. If the group declines, a return to courts—and a reawakening of formal regulatory intervention—seems likely. Even if an agreement is reached, it will be a test case for whether contractual settlements can sufficiently rebalance power in a market where technical and economic leverage are deeply intertwined.In the meantime, the EU will continue probing the cloud market for signs of anticompetitive behavior, and national regulators are expected to ramp up scrutiny of contractual “gotchas” that stifle competition under the guise of software innovation. It’s possible that other software vendors—IBM, Oracle, VMware—may be prompted to review and reform their own licensing policies if Microsoft’s model is forced to change.
For European customers, CIOs, and cloud architects, the upshot is clear: understanding the fine print of licensing agreements is now as essential as evaluating features, SLAs, or security postures when assessing cloud platforms. Vendor strategies will need to adapt to a new phase where trust, fairness, and regulatory compliance are as decisive as raw technical innovation.
Conclusion
Microsoft’s overture to CISPE is a litmus test for the future of fair competition in the European cloud market. Its willingness to make commercial concessions underscores a recognition of ever-tightening regulatory scrutiny and a shifting balance of power in cloud ecosystems. Nevertheless, until the specifics of any agreement are publicly disclosed and subjected to real-world validation, skepticism is justified.The resolution of this dispute will either embolden regulators to demand further market reforms or reassure global cloud giants that compliance is possible through incremental, negotiated change. The eyes of the entire global tech industry are on Europe—what happens next will shape not only who controls the cloud, but also how technology, policy, and business will intersect as the era of digital infrastructure matures.
For now, it remains the job of CISPE, its members, Microsoft, and attentive regulators to ensure that this critical opportunity is seized—on terms that prioritize openness, fair competition, and the long-term interests of Europe’s digital future.
Source: theregister.com Microsoft offers EU cloud providers fresh commercial terms
