As companies increasingly look to migrate their applications and infrastructure to the cloud, a significant hurdle has emerged for those heavily invested in Microsoft software ecosystems: the near impossibility of simply swapping Microsoft Windows and SQL Server workloads for Linux-based alternatives. This challenge has been highlighted vividly in recent submissions by cloud giants Amazon Web Services (AWS) and Google to the UK's Competition and Markets Authority (CMA), which is investigating competition dynamics in the UK's cloud sector.
Historically, customers who owned Microsoft software licenses could use them in outsourced data centers without having to purchase new licenses for virtualized environments—commonly referred to as "license mobility." However, since 2019, Microsoft has altered its licensing terms such that to run virtual instances of Windows Server or SQL Server on Amazon, Google, or Alibaba clouds (which Microsoft labels as "listed providers"), customers must acquire separate cloud-specific licenses. This approach has the practical effect of inflating licensing costs on these competitors' clouds by up to four times compared to running the same workloads on Microsoft Azure.
Google explicitly told the CMA that this pricing structure renders their Google Cloud Platform (GCP) less competitive versus Azure, given the higher cost to run Microsoft software virtually on their infrastructure. AWS concurs, estimating that roughly half of their customers would consider moving workloads to a non-Microsoft cloud if the cost disparity were reduced.
Enterprise customers rarely start fresh when migrating to the cloud. Many have built extensive, business-critical applications tightly coupled to Windows and Microsoft's technologies over many years—or even decades. Google summed this up by stating that migrating to Linux often means rewriting all of these applications, a process that takes "years and years," entails significant financial cost, and often exceeds the capabilities of most customers' in-house software engineering teams.
The CMA report relays that the replatforming journey is highly resource-intensive and disruptive, often costing organizations millions and stretching over multiple years. This is a particular problem for large enterprises whose legacy investments in Microsoft software represent a substantial part of their operational backbone.
In this light, the "choice" boils down to either remaining locked into Microsoft Azure or facing massive markup costs to run workloads on AWS or GCP. For many organizations, moving to Azure is not about preference but a practical necessity to contain costs and avoid the burdensome rewrite of applications.
Microsoft positions itself as walking a "precise tightrope," trying to charge a fair price for their software use without making it prohibitively expensive. However, the CMA's preliminary findings suggest this strategy may have "harmed competition" in the UK cloud market by limiting customer choice.
While the CMA concludes that "committed spend discounts" exist and are not necessarily problematic, smaller cloud rivals argue that such practices further entrench the dominance of hyperscale cloud providers, favoring the "Big Three" (Microsoft Azure, AWS, and GCP) at the expense of smaller players and innovation.
Users have reported multiple challenges including:
These challenges underscore the broader inertia in enterprise IT—platform switching is inherently disruptive and expensive. While cloud providers like AWS and Google loudly advocate for more competitive licensing to break these barriers, the path to true cloud portability and customer choice requires more than just price adjustments. It demands innovations in application portability, better migration tooling, and industry-wide commitments to interoperability.
The CMA's review and potential regulatory interventions in the UK cloud space will be a crucial test of market fairness and could set important precedents globally. For now, businesses stuck in Windows Server and SQL Server environments face a tough calculus: pay a premium on non-Azure clouds or embrace a lengthy, costly replatforming journey to Linux.
This analysis draws on the detailed reporting of recent CMA investigations and cloud provider statements as presented in the article from The Register, alongside user experiences and challenges surfaced in Windows enthusiast forums.
Source: Google and AWS: Linux too hard, so customers move to Azure
The Cloud Licensing Dilemma
Historically, customers who owned Microsoft software licenses could use them in outsourced data centers without having to purchase new licenses for virtualized environments—commonly referred to as "license mobility." However, since 2019, Microsoft has altered its licensing terms such that to run virtual instances of Windows Server or SQL Server on Amazon, Google, or Alibaba clouds (which Microsoft labels as "listed providers"), customers must acquire separate cloud-specific licenses. This approach has the practical effect of inflating licensing costs on these competitors' clouds by up to four times compared to running the same workloads on Microsoft Azure.Google explicitly told the CMA that this pricing structure renders their Google Cloud Platform (GCP) less competitive versus Azure, given the higher cost to run Microsoft software virtually on their infrastructure. AWS concurs, estimating that roughly half of their customers would consider moving workloads to a non-Microsoft cloud if the cost disparity were reduced.
The Migration Quandary: Linux Is Not an Easy Escape
One might assume that if Microsoft's pricing model artificially inflates costs on rival clouds, enterprises would simply move away from Windows Server and SQL Server to Linux-based operating systems and open-source databases, thereby escaping Microsoft's licensing stranglehold. But this, as the CMA report and the cloud providers emphasize, is far easier said than done.Enterprise customers rarely start fresh when migrating to the cloud. Many have built extensive, business-critical applications tightly coupled to Windows and Microsoft's technologies over many years—or even decades. Google summed this up by stating that migrating to Linux often means rewriting all of these applications, a process that takes "years and years," entails significant financial cost, and often exceeds the capabilities of most customers' in-house software engineering teams.
The CMA report relays that the replatforming journey is highly resource-intensive and disruptive, often costing organizations millions and stretching over multiple years. This is a particular problem for large enterprises whose legacy investments in Microsoft software represent a substantial part of their operational backbone.
In this light, the "choice" boils down to either remaining locked into Microsoft Azure or facing massive markup costs to run workloads on AWS or GCP. For many organizations, moving to Azure is not about preference but a practical necessity to contain costs and avoid the burdensome rewrite of applications.
Microsoft’s Position: Pricing as a Strategic Balance
Unsurprisingly, Microsoft defends this pricing model as a calibrated effort to balance competitive dynamics without pushing customers away. They argue that licensing their server software at too low a price to cloud providers would create incentives for those providers to encourage their customers to abandon Microsoft products altogether.Microsoft positions itself as walking a "precise tightrope," trying to charge a fair price for their software use without making it prohibitively expensive. However, the CMA's preliminary findings suggest this strategy may have "harmed competition" in the UK cloud market by limiting customer choice.
Beyond Licensing: Other Barriers to Cloud Migration
Microsoft's cloud licensing is only one piece of a larger puzzle that stifles true cloud competition. The CMA is also examining other factors such as data egress fees—the costs for moving data out of a cloud provider—and technical lock-ins that make it difficult to seamlessly move cloud workloads from one vendor to another.While the CMA concludes that "committed spend discounts" exist and are not necessarily problematic, smaller cloud rivals argue that such practices further entrench the dominance of hyperscale cloud providers, favoring the "Big Three" (Microsoft Azure, AWS, and GCP) at the expense of smaller players and innovation.
The Prospect of a Remedy
The CMA's final report, due July 4, will likely propose remedies that seek to break the Microsoft licensing impasse and address other anti-competitive concerns in the cloud market. How those proposals will shape the cloud landscape, and whether Microsoft will relax licensing restrictions or alter its business model, remains an open question.The End-User Perspective: Linux vs. Windows Trade-Offs
Discussions from user communities provide deeper context on why switching to Linux—though theoretically a path to freedom from Microsoft lock-in—is not a trivial choice.Users have reported multiple challenges including:
- Extensive time and expertise needed to migrate and re-engineer applications.
- Compatibility issues with hardware and software, with many Windows applications lacking equivalent or compatible Linux versions.
- A steeper learning curve for Linux administration, particularly the need to use command-line tools and less graphical user-friendly settings compared to Windows.
- Risks of system instability or difficulties in troubleshooting, especially for users unfamiliar with Linux ecosystem nuances.
- Lack of simple, complete replacements for certain industry-standard Windows software suites.
Conclusion: The Cloud Migration Crossroads
The predicament faced by enterprises vividly illustrates the friction between legacy software dependency and the promise of a more open cloud ecosystem. Microsoft's licensing policies, while logical from a corporate revenue perspective, have inadvertently cemented a "walled garden" where customers feel compelled to remain within the Azure ecosystem or face steep conversion costs.These challenges underscore the broader inertia in enterprise IT—platform switching is inherently disruptive and expensive. While cloud providers like AWS and Google loudly advocate for more competitive licensing to break these barriers, the path to true cloud portability and customer choice requires more than just price adjustments. It demands innovations in application portability, better migration tooling, and industry-wide commitments to interoperability.
The CMA's review and potential regulatory interventions in the UK cloud space will be a crucial test of market fairness and could set important precedents globally. For now, businesses stuck in Windows Server and SQL Server environments face a tough calculus: pay a premium on non-Azure clouds or embrace a lengthy, costly replatforming journey to Linux.
This analysis draws on the detailed reporting of recent CMA investigations and cloud provider statements as presented in the article from The Register, alongside user experiences and challenges surfaced in Windows enthusiast forums.
Source: Google and AWS: Linux too hard, so customers move to Azure
