Facing European antitrust scrutiny, Microsoft has made it easier to virtualize its software on non-Microsoft cloud infrastructure—just so long as that infrastructure isn’t owned by notable competitors Amazon, Google, or Alibaba.
The conflict, months in the making, is striking for a company that has largely avoided the antitrust scrutiny of its rivals, and eagerly sought to distance itself from the anti-competitive complaints and government actions that beset Microsoft in the late 1990s.
Microsoft outlined the changes that would take effect on October 1 in a blog post. Nicole Dezen, chief partner officer, wrote that Microsoft “believes in the value of the partner ecosystem” and changed outsourcing and hosting terms that “will benefit partners and customers globally.”
New licensing terms would make it easier for Microsoft’s enterprise customers to bring Microsoft software to non-Microsoft infrastructure and scale the cost and size of theirs or their customer’s Microsoft systems on their own hardware, according to Dezen’s post.
But Microsoft wants to be clear about something: Its Services Provider Licensing Agreement (SPLA) was meant for customers that are offering hosting “from their own data centers,” not buying Microsoft licenses to “host on others’ data centers.” To “strengthen the hoster ecosystem,” Dezen writes, Microsoft will remove the ability to outsource to Alibaba, Amazon Web Services, Google, Microsoft’s Azure cloud, or anybody using those companies as part of their hosting.
Amazon and Google have weighed in, and they do not believe Microsoft is showing its newer, less anti-competitive side.
“Microsoft is now doubling down on the same harmful practices by implementing even more restrictions in an unfair attempt to limit the competition it faces—rather than listening to its customers and restoring fair software licensing in the cloud for everyone,” an Amazon spokesperson told Reuters .
Marcus Jadotte, vice president for government affairs and policy at Google Cloud, tweeted, “The promise of the cloud is flexible, elastic computing without contractual lock-ins.” Customers should have the freedom to move and choose what’s best for them, “rather than what works for Microsoft,” Jadotte wrote.
Microsoft describes its upcoming license changes as coming “in response to partner feedback,” neglecting to mention the licensing changes it made earlier that drew EU antitrust scrutiny. Changes to Microsoft’s licensing terms in October 2019 raised the price of running Microsoft services on non-Microsoft “hyperscale” infrastructure. Microsoft’s Azure provider was included in the higher-price list, but customers would often receive a separate discount that offset much of the increase.
ZDNet’s Mary Jo Foley notes that many customers didn’t notice the price hikes until their licenses came up for renewal, many of them this year.
Responding to EU inquiries in May, Microsoft President Brad Smith wrote on Microsoft’s EU Policy Blog that “while not all of these claims are valid, some of them are, and we’ll absolutely make changes soon to address them.” The changes Smith outlined were aimed at “European Cloud Providers,” such as OVHcloud, which had contacted the EU regarding Microsoft’s licensing. In other words, small to mid-size providers, not the other companies Microsoft competes with for 65 percent of the global cloud.
The European Commission continues its inquiry into Microsoft’s business practices. CISPE, a European cloud provider group, which includes Amazon as one of its members, told Bloomberg in a statement this week that Microsoft’s new system “not only fails to show any progress in addressing Microsoft’s anti-competitive behavior but may add new dependencies that further lock in customers and arbitrarily exclude cloud infrastructure providers.”