CMA suggests link between unfair software licensing and cloud competition

Jun 10, 2024 | News

Last week, the UK’s Competition and Markets Authority (CMA) published its working paper on software licensing as part of its cloud services market investigation. Although an interim output of the wider and ongoing investigation, this paper presents a detailed and comprehensive analysis which draws upon independent customer research as well as the submissions of both cloud customers and vendors.

It presents for the first time, clear insight into how dominant software providers can leverage unfair licensing practices to restrict customers’ choice of cloud. The paper highlights that the CMA is closely considering the impact of dominance in adjacent software markets on competition in the cloud as part of its market investigation.

This is a highly significant moment in the campaign for fair software licensing and a win for CISPE as we continue to campaign for the Ten Principles for Fair Software Licensing in the cloud.

Launched with Cigref in 2021, the Ten Principles are not only referenced in the CMA’s working paper but attached as an appendix. The remedies outlined by the CMA for comment from stakeholders are also closely aligned to those proposed by CISPE as a principle-based solution to unfair software licensing practices which harm customer choice in the cloud.

Although these are interim findings, they are highly relevant as they formally establish for the first time a link between dominance in adjacent software markets, and anti-competitive effects in the cloud. CISPE has long argued for customers to be free to take the software they own to run in the cloud of their choice.

CISPE has been a contributor to the CMA’s market investigation from the outset, and our evidence and insights are included alongside those of other vendors and customers throughout the report. As regulators around the world consider individual cases as well as wider market investigations, they should reference this detailed analysis from the CMA.

The CMA has established an important precedent for others. As authorities in Spain, South Africa and New Zealand, as well as DG Comp in Europe investigate these issues they should consider the CMA’s case for principle-based remedies to address unfair software licensing issues as and when they restrict customers choice of cloud. The full CMA working paper can be found here.

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