Agent Smith and The Microsoft Matrix – Or how Microsoft spent the past 12 months convincing us that the Azure pill is the best choice

May 31, 2023 | Comments, News

Agent Smith and The Microsoft Matrix

Or how Microsoft spent the past 12 months convincing us that the Azure pill is the best choice.

In May 2022, Microsoft President Brad Smith came to Brussels promising to act to end his company’s unfair software licensing practices that damage European cloud infrastructure service providers and their customers. For all the grandiose talk of listening to customers and adopting principles, one year on, little has changed. In many ways the situation has got worse. Vague promises, back-room deals and arcane tweaks to licence terms are no substitute for clear, principle-based remedies that benefit the entire sector.

We paused our own complaint against Microsoft’s unfair software licensing terms in the summer last year, to allow our members time to review and assess the promised changes to terms on October 1st. When they came, they were complex and poorly communicated, to the extent that many still do not understand what they do and do not allow. Just like in the 1990’s dystopian sci-fi film The Matrix, you have to look out for the small signs that something is not right.

On close inspection it became clear that the new terms did nothing to solve existing problems. In fact, they created new ones. We filed our complaint AFTER the October 2022 changes because it was obvious that Microsoft, far from solving unfair licensing issues, was adding new, unnecessary and unfair practices. New discriminatory pricing forces Azure infrastructure on customers and new auditing and reporting requirements in the new Cloud Services Provider-Hoster (CSP-Hoster) programme demand confidential data on customers be shared with Microsoft.

CSP-Hoster certainly makes it easier to sell more Microsoft licenses, but only by transforming independent cloud infrastructure providers into mere resellers of Microsoft software. This is a point recognised not just within CISPE, but increasingly across the sector. Amit Zavery, vice president of Google Cloud, made a broadly similar point in an interview with Les Echos this week:

“The majority of these changes simply allow partners to sell more Microsoft products without changing the restrictions. This is an attempt by Microsoft to integrate other competitors, picking winners and losers…”

The fact that these license changes completely missed the mark was further evidenced by the rumours of private agreements with the three initial complainants Aruba, OVHcloud and the Danish Cloud Community that surfaced earlier this year. If the problems were so comprehensively solved, why the need to offer specific deals to these parties?

And it seems that the Commission also has new concerns. After a comprehensive initial round of RFIs seeking supplementary evidence for our complaint this year, the last month has seen new RFIs go to members and potentially others across the sector. As reported in Bloomberg and Reuters, these ask specifically about the access demanded by Microsoft to customer data.

Microsoft, like Agent Smith in the movie, makes dubious attempts to present itself as a reasonable player. It recently claimed that 75 European CSPs are adopting the new CSP-Hoster licenses. Who these CSPs really are, whether they are truly independent of Microsoft, and even if they actually offer cloud infrastructure services is unclear. Moreover, faced with Microsoft’s dominance, do they really have any choice but to join? These numbers simply demonstrate the harsh extent to which CSPs are tied to by Microsoft.

The reality is that there has been no discussion, only presentation of what Microsoft has already unilaterally decided to offer. And what it has offered has made little if any difference to help our European customers make an unrestricted choice of cloud infrastructure, free of lock-in.

The last 12 months have been wasted and have allowed Microsoft to continue unfairly capturing European customers as they seek to shift enterprise and productivity workloads to the cloud and cultivating its dependent, lock-in monoculture which it controls. Sometimes we feel stuck in The Microsoft Matrix. Microsoft presents a fantasy world where everyone prospers, yet underneath that veneer our members and their customers continue to power this fantasy whilst being gradually sucked dry!

It’s time to take the red pill and see the Microsoft construct for what it is.