Microsoft releases planned changes to overturn restrictive cloud licensing policies in Europe

In early April, Microsoft officials said they would address some of the complaints from European cloud providers about restrictive cloud licensing policies that have led customers to pay more to run Microsoft software in non-Microsoft cloud environments. On May 18, Microsoft went public with its patch plans via a blog post from Microsoft President Brad Smith.

In this blog post, Microsoft outlined five “European Cloud Principles”. The real meat, however, is planned changes to level the playing field for European cloud providers when it comes to running Microsoft software on-premises, such as Windows, Windows Server, SQL Server and Office. , on their own infrastructure.

Microsoft introduced the outsourcing licensing restrictions in question in 2019. Customers who used AWS and Google Cloud as Dedicated Hosts to run Windows Server and customers were directly affected, but some of them didn’t realize the problem. extent of the impact until their contracts with Microsoft was up for renewal this year. Microsoft’s changes to their “bring your own license” license terms made their contracts more expensive if they wanted to run Microsoft software on anything other than Azure. To justify its changes, Microsoft officials said rivals like AWS or Google are always free to make similar licensing and pricing changes.

Smith said in April that Microsoft would look for ways to address partner concerns it believed were valid. After European antitrust regulators began digging into complaints from partners and customers, Microsoft agreed to look into the matter.

Bloomberg then released a report citing customers who were not very happy with the new licensing rules.

In today’s blog post, Smith said he and other senior Microsoft executives had meetings with the CEOs of two European vendors, as well as additional meetings with companies from various European countries. He noted:

“Some of the most compelling comments for me personally came from a CEO who said he felt” victim of friendly fire in Microsoft’s competition with Amazon.’ It was hard to hear – but he was right. Over the past few years, our focus on competing with the biggest technology vendors has led us to be less mindful of the impact on our cloud vendor partners. We are making changes to address this, starting today.”

Smith said Microsoft will provide European cloud providers with support to enable on-premises Microsoft software to run on their cloud infrastructure. This expansion of terms will cover Windows, Office, and Microsoft 365 apps for business and enterprise. Microsoft will also make Windows Server licensing “easier than ever” for virtual environments by relaxing licensing rules “that reflected legacy software licensing practices, where licenses are tied to physical hardware.” (This was one of the biggest complaints from Microsoft’s cloud competitors after licensing changes were announced in 2019.) He explained:

“Today, Software Assurance benefits do not include License Mobility rights for products such as Windows, Office, or Windows Server, so customers must use this software in more restrictive programs or on hardware dedicated specifically to these customers. We will extend Software Assurance to allow customers to use their licenses on any European cloud provider providing services in their own data centers, in the same way that they can on Azure today, whether the hardware is dedicated or multi-tenant.

Smith also said that Microsoft plans to expand the range of products that can be offered to customers at longer-term fixed prices, “which will provide more stability and price certainty to vendors and their customers.”

I asked Microsoft if these corrective measures would also apply to cloud hosts and customers outside of Europe – and if not, why not. No return for now.

Update: It remains to be seen to what extent these changes benefit anyone other than European cloud providers. Directions on Microsoft analyst Wes Miller noted today on Twitter that the new language does not change the fact that European vendors and customers who want to run Microsoft software directly on competitors’ clouds are still hamstrung.

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