On 29th August Microsoft, after its admission of unfair practices last May, posted a series of blogs proposing ‘upgrades’ to its software licences in an effort to head-off looming competition investigations across Europe. As a preliminary assessment of the potential impact of these proposals we have assessed them against the Principles for Fair Software Licensing recognised and supported by respected cloud user organisations across Europe. Our initial findings can be seen below.
Any changes to Microsoft licensing program must conform and be auditable against the Principles for Fair Software Licensing. This is Europe’s best chance for a competitive and vibrant marketplace for cloud infrastructure services.
|1||Licensing Terms Should Be Clear and Intelligible||Failed||Much of Microsoft’s blog is vague and hard to decipher. There are no examples of actual license terms relating to the proposed changes and as a result, it is not possible to determine if additional licensing costs or obligations might apply.
In many places new ‘benefits’ are contingent on customers contracting a Software Assurance program with Microsoft. This suggests that additional obligations, including payments, for the customer may exist, therefore reducing clarity of contract terms.
Furthermore, Microsoft’s proposal is to add a 3rd category of licence (CSP-Hoster) and to restrict the use of SPLA licences. This adds further confusion and creates new opportunities for self-preferencing, discrimination and anti-competitive behaviour.
|2||Freedom to Bring Previously Purchased Software to the Cloud||Partially Met||Microsoft’s blog suggests that customer’s software license can be migrated from on-premises into the cloud.
However, this appears contingent to the customer entering into a Microsoft Software Assurance program. It is unclear what additional restrictions or lock-ins and increased costs could be incurred through this dependency. There is potential for discrimination in customers’ ability to run their licensed software on the cloud of providers of their choosing.
The requirement for customers to enter into a Software Assurance establishes a direct relation with Microsoft, in addition to their cloud provider, even when such relation might not exist previous to the porting of the customer software to a multitenant infrastructure.
|3||Customers Should Be Free to Run their On-Premises Software on the Cloud of their Choice||Partially Met||As above, Microsoft’s blog suggests that customer’s software license remains fully effective and is not affected by their choice of cloud. Crucially Microsoft excludes what it terms ‘Listed Providers’. Currently these are Alibaba, AWS and Google, but there is no restriction on others being added to this list as and when they become threats to Microsoft’s dominance. In addition, the implications of the following caveat are unclear…
*Listed Providers include Alibaba, Amazon Web Services, Google, and Microsoft, and any outsourcer using a Listed Provider as part of the applicable outsourcing service. (emphasis added)
This could make it impossible for cloud infrastructure providers to, for example, combine their services with listed providers to provide redundancy or operational resilience as demanded by some customers.
|4||Reducing Costs through Efficient Use of Hardware||Partially met||Microsoft’s blog states that “we will introduce an option to license Windows Server on a virtual core basis” and suggest that “Microsoft 365 F3, Microsoft 365 E3, or Microsoft 365 E5 license will be able to virtualize Windows 10 or Windows 11” without need for additional VDA licenses.
It is unclear if other license types are impacted and what the pricing or additional conditions (including certification and additional requirements to participate in the new licensing program) of these new virtual core licenses will be.
|5||Freedom from Retaliation for Cloud Choices||Failed||There is nothing in Microsoft’s blog that gives any assurance that it will not apply additional restrictions, including through the terms of the Software Assurance program, to penalize or retaliate against customers who choose to use third-party cloud services to run their Windows or Office Desktop and VDA software.|
|6||Avoiding Customer Lock-In Through Interoperable Directory Software||Failed||There is no mention nor commitment in Microsoft’s blog to support open standards for syncing and authentication purposes for windows servers or applications end-users.|
|7||Equal Treatment for Software Licensing Fees in the Cloud||Failed||In spite of ‘upgrading’ CSP and adding CSP-Hoster license types, the Microsoft blog makes no mention of pricing structures. One of the key complaints of our members is the self-preferencing pricing increases between CSP and SPLA licence costs. Nothing in these proposals provides any assurance that this discrimination will end.
Indeed, the creation of the new CSP-Hoster category, the new restrictions of the SPLA licences, plus the need to join the Software Assurance programme all seem intended to further increase differentiation in costs to licence the same software, and to bind both partners and their customers ever closer to Microsoft.
|8||Permitted Uses of Software Should Be Reliable and Predictable||Failed||The blog does not cover changes to permitted uses of software.
It is also unclear what additional obligations and restrictions to permitted uses would be included in the Software Assurance programme, compliance with which seems crucial for most of these proposals. Microsoft should clearly and intelligibly define permitted uses in its ‘upgraded’ licensing terms in accordance with Principle 1 and Principle 9.
|9||Licenses Should Cover Reasonably Expected Software Uses||Failed||The blog does not propose any clarification on expected uses of the software and any possible dependencies on other licenses. These must be clearly and unambiguously defined in the licensing terms.|
|10||Permitting Fair Software Transfers||Failed||Nothing in the Microsoft proposals provides any assurance that customers can resell or transfer licenses they no longer require.|