24-Months On, And We’re Still Waiting for A Principle-Based Solution To Unfair Software Licensing

Mar 17, 2023 | Press release

Lots of promises – but no action to help European Customers

It has been nearly 2 years since CISPE and Cigref launched the Ten Principles as a solution to the ongoing use of unfair software licensing terms to deprive customers of the opportunity to run software in the cloud of their choice.

It is almost a year since Microsoft President, Brad Smith, said “while not all of these claims are valid, some of them are, and we’ll absolutely make changes soon to address them.”

On 1st April it will be six months since Microsoft updated its licenses and introduced the CSP-Hoster category  – yet for hundreds of thousands of European customers nothing has changed and they continue to pay an unfair software licence tax.

New research from Professor Jenny, due to be previewed at the CISPE Cloud Summit on 22nd March, as well as research published in Italy, Spain, France and The Netherlands in the last year, all points to ongoing harm to European businesses as they are prevented from running the software they purchase in the cloud of their choice.

In April 2021, CISPE and Cigref highlighted the ways in which unfair software licenses not only locked-in customers but saw license fees rising out of proportion to growth.  This chills innovation and increases dependency on large integrated cloud players to the detriment of European SME’s with competing solutions.

We now know what these unfair practices are costing European businesses. They represent an effective tax on customers wanting to exercise their choice of cloud infrastructure. Research from I-COM in Italy suggests that removing this tax by adopting the Ten Principles could lead to growth in the IT sector of as much as €1.61 billion per annum.

In France research commissioned by the Concorde Foundation found that almost three-quarters of the business surveyed had witnessed the use of unfair software licensing terms to restrict their choice of cloud infrastructure. The report goes onto argue that anti-competitive practices such as these had wiped €6 billion of potential growth from the French cloud market.

The Nubes initiative in Spain has explored the importance of the cloud for SMEs and start-ups with specific interest on their role in stimulating the digital economy in that country. It found that anti-competitive behaviour leveraging strong links between cloud services and adjacent software products was risking the potential for more than €1.4 billion in cloud revenues by 2030, and 12,400 new cloud jobs.

Market studies into the competitiveness of the cloud sector are underway in France and the UK, and the ACM in The Netherlands already suggests potential issues with the use of software licences to lock-in customers to specific cloud infrastructures.

In May last year. Microsoft made a big deal of its commitment to address these issues. At the time we questioned whether they would indeed really help customers. In October a raft of changes were implemented without any engagement with European customers. They were complex and hard to understand. Our close examination of these changes plus conversations with members and representatives of customers in private and public sectors, highlighted that they did not, in fact, end the abuses and unfair practices suffered by our members and their customers.

Billions of Euros are at stake, representing significant proportions of revenues and profits of European business. Every year this is money creamed off from European businesses through the imposition of unfair software licensing. It is money that could fund new jobs, new innovation and higher quality services to European consumers.

With multiple complaints against it, now is the time for Microsoft to act to ensure that all customers benefit from a principle-based approach to fair software licensing.

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