Microsoft relaxes cloud licensing terms to reportedly avoid EU probe

19 May 2022

Microsoft president Brad Smith in 2018. Image: Harry Murphy/RISE via Sportsfile (CC BY 2.0)

It was reported last month that EU regulators were quizzing Microsoft’s rivals and customers about its cloud business and licensing deals.

Microsoft has announced plans to revise its cloud licensing deals to make it easier for European cloud providers to compete, following reports that the tech giant is being looked into by antitrust regulators.

Reuters reported last month that the EU Commission had begun quizzing Microsoft’s customers about its cloud business and licensing deals.

In a blog post yesterday (18 May), Microsoft shared its five “European cloud principles”, which it said will enhance transparency and better support Europe’s technology needs. One of the principles is to support European cloud service providers.

The changes include a revision to cloud licensing. Under the new terms, customers will not have to buy an additional licence if they have already purchased Microsoft’s cloud services.

Microsoft president Brad Smith said the changes follow feedback the tech giant heard from European cloud providers. One example he gave was from a CEO who said that he felt that he “was a victim of friendly fire in Microsoft’s competition with Amazon”.

“It was hard to hear this – but he was right,” Smith said. “Over the past few years, our focus on competing with the largest technology providers has resulted in us not being as attentive to the impact on our cloud provider partners. We are making changes to remedy this, beginning today.”

EU commissioner for competition Margrethe Vestager said last month that Brussels was “actively following up” on a complaint toward Microsoft’s cloud service business practices, according to the Financial Times.

The Finanical Times reported that the complaint related to licensing changes Microsoft made in 2019, which altered the way the tech giant charges for products such as Office when they are running in the  data centres of Amazon Web Services, Google and Alibaba.

Smith said Microsoft competes “every day” with Amazon and that this has affected the ability of smaller companies to compete.

“Especially as the largest tech companies have invested more in their infrastructure and services, the biggest challenge has been for smaller cloud providers, like those headquartered in Europe that have expressed concerns about our licensing practices and their ability to compete,” Smith added.

According to Reuters, the European Commission has fined Microsoft €1.6bn over the last decade due to the tech giant breaching EU antitrust rules.

Last November, a group of tech companies in the EU, called out Microsoft on anti-competition grounds for favouring its own products on the market-leading Windows OS.

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Microsoft president Brad Smith in 2018. Image: Harry Murphy/RISE via Flickr (CC BY 2.0)

Leigh Mc Gowran is a journalist with Silicon Republic