Microsoft has announced new licensing terms for cloud providers in Europe following criticism that the company impeded competition in the cloud market. The updated agreement is part of an ongoing dialogue with Cloud Infrastructure Service Providers in Europe (CISPE), an industry group representing more than 30 independent cloud providers, including Amazon Web Services (AWS) and now Microsoft itself.
The dispute stems from allegations that Microsoft charged higher fees to cloud providers running its software—such as Windows Server, Exchange, and SharePoint—when those products were hosted on platforms other than Azure.
Why is Microsoft changing its licensing terms?
In 2022 CISPE filed a complaint with the EU competition authority, arguing that Microsoft’s licensing model limited competition and favored Azure. As a remedy, Microsoft pledged to develop a European version of Azure Local (formerly Azure Stack HCI), with features that include:
- Multi-user Windows 11 virtual desktops.
- Free security updates for customers outside Azure.
- Flexible SQL Server licensing on a pay-as-you-go basis.
Microsoft failed to deliver these commitments within the agreed timeframe, prompting renewed negotiations.
What does Microsoft’s new offer include?
According to sources, Microsoft has now:
✅ Dropped the requirement for cloud providers to send their customer lists to the company.
✅ Proposed lower fees for the Service Provider License Agreement (SPLA).
Microsoft had previously announced a 10% increase in SPLA fees effective January 2025, a move that drew strong criticism from European cloud providers.
CISPE commented:
“We have received Microsoft’s new proposal within the timeframe specified in the July 2024 agreement. It is currently under review, and a decision is expected in the coming weeks.”
How will this affect the cloud market in Europe?
The new agreement is primarily economic rather than technical. Observers say it remains to be seen whether Microsoft’s revised terms will truly create a level playing field for European cloud providers.
Azure’s main competitors—AWS and Google Cloud—have also accused Microsoft of making it more expensive to run its software on other platforms. Google has even filed a separate complaint with the EU about the licensing terms.
Regulators beyond the EU are watching closely as well: the UK’s Competition and Markets Authority (CMA) and U.S. agencies including the Federal Communications Commission (FCC) are monitoring developments.
A Microsoft spokesperson said:
“We are committed to building a strong, sustainable, and collaborative partnership with CISPE and the European cloud community.”
As regulators and industry groups review Microsoft’s proposal, the outcome could influence pricing, transparency, and competitive dynamics across Europe’s cloud ecosystem. The key question is whether these changes will enable independent providers to compete on equal terms or simply constitute an incremental economic adjustment that leaves structural advantages intact.