Microsoft and CISPE make ‘significant breakthrough’ with software licensing concessions – critics say it's all just 'smoke and mirrors'

An alliance of European cloud providers has won concessions from Microsoft over its software licensing practices that could settle a long-running battle.

As part of the deal, Cloud Infrastructure Services Providers in Europe (CISPE) said members will now be allowed to offer Microsoft software to customers on a pay-as-you-go basis via the CSP-Hoster (CSP-H) program, with stronger privacy for customers of European cloud providers.

This, it said, will make pricing conditions for products including Windows Server and SQL Server more comparable to those of Microsoft’s own cloud platform, Azure.

“The agreement we reached with Microsoft marks a significant breakthrough in our long-standing efforts to ensure a level playing field,” said Francisco Mingorance, secretary general of CISPE.

“For enterprise customers, the new programs directly address previous concerns of CISPE members and empowers European enterprises to choose among a wide range of cloud solutions that meet their sovereignty, compliance, and economic needs.”

Meanwhile, Microsoft 365 Local will allow deployment on local cloud infrastructure, taking a further step toward digital sovereignty for European customers.

The deal applies to current CISPE members and eligible European cloud providers who join CISPE in the coming months. Microsoft has said it may expand access after a one-year review of the program's effectiveness.

Notably, the deal doesn’t apply to hyperscale cloud providers designated by Microsoft as ‘Listed Providers’. This, CISPE said, will help support competition and innovation across the European digital ecosystem by strengthening regional providers.

What’s the story behind the Microsoft-CISPE dispute?

The conflict between Microsoft and CISPE stretches back several years, with the latter having filed a formal complaint with the European Commission in 2022 amid claims the tech giant imposes higher charges for customers running its software on rival clouds.

In May this year, the European Cloud Competition Observatory (ECCO), charged with providing independent oversight on a deal, issued a report describing Microsoft's offering as 'disappointing' and giving the company an Amber rating.

Ryan Triplette, executive director of the Coalition for Fair Software Licensing, suggested the agreement still leaves questions unanswered.

"Every stalling tactic has just bought Microsoft more time to lock in customers with restrictive and anti-competitive licensing practices," he said.

"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," Triplette added.

"Meanwhile, Microsoft continues to line its pockets at the expense of customer choice around the world.”

Notably, the deal lacks two provisions that CISPE had been calling for. First and foremost, it doesn't allow for Windows 10/11 VDI multi-session on European-owned multi-tenant infrastructure.

Similarly, it doesn’t remove the need to use Entra ID to activate Azure Active Directory and Microsoft 365 to allow full replacement and interoperability.

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