Microsoft has paid out to settle a major competition complaint from a European cloud consortium and promised licensing and hosting changes.
But the deal was met with stark criticism after it was announced late Wednesday (July 10) – with Google describing it as "disappointing" and Mark Boost, CEO of CIVO, describing it as “a global powerful company paying for the silence of a trade body.”
Redmond will pay an undisclosed “lump sum” to members of the Cloud Infrastructure Service Provider of Europe (CISPE), which includes AWS along with 34 smaller cloud providers – and work with them to make its hyperconverged Azure Stack HCI available on their infrastructure.
The deal will also see Redmond make multi-session VDI based on Windows 11, pay-as-you-go licensing for SQL Server and free Extended Security Updates (ESU) available on CISPE members’ cloud stacks.
Microsoft antitrust settlement: CISPE welcomes promises
CISPE said the deal will let European cloud providers offer Microsoft’s HCI stack, applications and services on their local cloud infrastructure,.
This will, it claimed, meet “the demand for sovereign cloud solutions and addressing the disruption experienced by European cloud providers and their customers following Broadcom’s acquisition of VMware…”
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Reuters reported that the sum agreed was €20 million euro ($22 million).
But as news of the agreement broke, Microsoft’s competitors warned that the cloud market is “still broken” and blasted the opacity of the deal.
Mark Boost, CEO of Civo, a cloud computing company, told The Stack: ““Today’s deal is not good news for the cloud industry - with several important questions that need to be answered… Surely the regulators must now ensure that the mostly undisclosed benefits that CISPE members and their customers will receive will be extended to every cloud provider and every cloud user that has been at the receiving end of Microsoft’s unfair software licensing practices,” he added in an email.
Microsoft CISPE deal: AWS excluded, blasts terms
CISPE member AWS was not party to the negotiations, not bound by the deal – and not, seemingly, happy with the outcome. An AWS spokesperson told The Stack: “Despite denying its licensing practices harm customers and competition, Microsoft is now making limited concessions for some CISPE members that demonstrate there are no technical barriers preventing it from doing what’s right for every cloud customer.
“Unfortunately, this settlement does nothing for the vast majority of Microsoft customers who are still unable to use the cloud of their choice in Europe and around the world. We continue to stand with the growing number of customers, providers, and regulators globally who are calling on Microsoft to end its discriminatory practices for all customers.”
Google also expressed its own disappointment with the agreement. Amit Zavery, GM/VP and Head of Platform, Google Cloud, said: “It is very disappointing that CISPE elected to take a ‘payoff’ from Microsoft instead of continuing to fight for a resolution that benefits European cloud customers.
"Microsoft’s playbook of paying off complainants rather than addressing the substance of their complaint hurts businesses and shouldn’t fool anyone. We are exploring our options to continue to fight against Microsoft’s anti-competitive licensing in order to promote choice, innovation, and the growth of the digital economy in Europe.”
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CISPE launched its competition complaint with the EC in 2022, accusing Microsoft of “anti-competitive practices”, including “unjustified and discriminatory bundling, tying, self-preferencing pricing and technical and economic lock-in”, tactics “sed by dominant software companies to restrict the choice of European companies as they move to the cloud.”
Microsoft “uses its dominance in productivity software to direct European customers to its own Azure cloud infrastructure to the detriment of European cloud infrastructure providers and users of IT services” it said.
Nine months until birth of "sovereign" HCI
Both parties have now signed a memorandum of understanding and CISPE will withdraw its complaint. Along with AWS, Google Cloud Platform and AliCloud will also “neither benefit nor be bound by these terms.”
Microsoft has nine months to fulfil its promise to deliver the new “Azure Stack HCI for Hosters” products, or CISPE will relaunch its complaint.
CISPE will also establish an independent European Cloud Observatory (ECO) to “monitor the development and ongoing evaluation of the product”. Members will include Microsoft, cloud infrastructure vendors operating across Europe, and representatives of European customer associations, who will make “periodic public assessments, reports and recommendations related to the implementation of the agreement…”
Francisco Mingorance, Secretary General, CISPE, said: “This is a significant victory for European cloud providers. CISPE has given Microsoft the benefit of the doubt and believes that this agreement will provide a level playing field for European cloud infrastructure service providers and their customers. Microsoft has nine months to make good on its commitment”
Dark rumbling in the cloud industry
Cloud competitors are not happy about the agreement and warned that it has done little to address issues with the competitive landscape in cloud.
CIVO Kubernetes and cloud specialist Mark Boost called for “fundamental changes” to the market because “hyperscalers cannot self-regulate” and have “operated unchecked for too long, with customers left with under par technology, opaque pricing and unpredictable billing."
“Many companies simply feel trapped into using hyperscalers, with services actively structured to disincentivize moving to an alternative provider,” he said “Regulators need to take action, and quickly. The CMA’s cloud investigation can ensure the UK forges a different path to the EU… including ending the scourge of the skewed system of cloud credits, and anti-competitive software licensing.”
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