A group of cloud infrastructure providers in Europe has delivered an ultimatum to Microsoft: End the "unjustified feature and pricing discriminations against fair competition" or face legal action.

With 27 member organizations - including 26 headquartered in the region plus US-based AWS - Cloud Infrastructure Providers in Europe (CISPE) is a non-profit industry group based in Brussels. It filed a complaint against Microsoft with the EU's antitrust cops in November 2022.

That complaint laid out how Microsoft discounts its own software when bundled with its own Azure cloud services - meaning it is more expensive to run Redmond’s wares in rival clouds. The Windows goliath tried to settle the case out of court last May. CISPE told The Register Microsoft's offer was "paltry" and rejected it.

The parties recently resumed negotiations, and the timing of today's statement to The Register seems designed to ratchet pressure on Microsoft's lawyers to offer bigger concessions. CISPE told us it used the Azure Pricing Calculator to highlight the pricing disparity at the heart of the issue - see the table below, provided by CISPE.

It shows, if CISPE is right, that although a member of the cloud association - a rival of Azure - can offer remote desktop virtual machines at lower cost than Microsoft, the red-tape put in place by Redmond leaves the competing provider worse off for customers in comparison, causing the rival to potentially lose sales to Azure.

"According to the Azure Pricing Calculator with the multi-session capabilities allowed on Azure, a customer can run a typical virtual desktop implementation supporting 32 users using just three virtual machines," the group explained.

"The licensing restrictions on multi-session use of Microsoft software outside of Azure impose on CISPE members to provision 32 virtual machines - that is ten time more machines - to support the same number of users. Even with lower cost hardware (VM cost per hour) the cost of supporting 32 users for a CISPE member is 2.5 times higher than what Microsoft charges."

The dominance of Microsoft software in the enterprise means cloud infrastructure providers often need to accommodate customers' IT estates that inevitably include Office, Windows, and more. That's software Microsoft ensures is cheaper to run on Microsoft's Azure cloud compared to rivals, according to CISPE, hence that group's unhappiness.

CISPE members are similarly upset about the price of service provider license agreements, arguing Microsoft charges double digit percentages more to run SQL Server Enterprise licensing on non-Azure servers. Again, here's a table from CISPE advancing those claims.

"These figures are just the tip of the iceberg," Francisco Mingorance, secretary general of CISPE, told The Register. "This data represents prima facie evidence that Microsoft is acting against fair competition.

"The unjustified feature and pricing discriminations imposed by Microsoft on its dominant software, Office and Windows, outside of Azure, squeeze the margins of rival cloud infrastructure providers, lock in customers and raise prices."

"It is clear that there is a straightforward competition case here and that if these unfair licensing practices are not immediately ended by Microsoft voluntarily, legal and regulatory action should swiftly follow," he declared.

Microsoft declined to comment, though The Register understands the computing titan believes CISPE's license cost calculations do not reflect cloud providers' operating practices with regard to managing the cost of licenses across multiple tenants.

CISPE's complaints pertain to changes Microsoft made in 2019, when it set new rules that forced customers to update licensing. For example, Microsoft's customers could run its software on any cloud - but if they wanted to run it on shared infrastructure they needed to stump up for License Mobility via a Software Assurance license. Customers with dedicated infrastructure did not. That changed in 2019.

Also in the same year, customers that bought perpetual licenses to Azure could no longer run the Microsoft applications on so-called 'listed providers' - meaning they had to buy new licenses. And some software, including Office 365 Windows Apps, was forbidden from running on rivals' clouds. On this last point, Microsoft made a concession for AWS in August.

Google has previously told us customers are forced to pay the Microsoft "tax." The search and ads leviathan submitted a complaint to the UK Competition Markets Authority in December 2023, as the regulator is inspecting the health of the local cloud industry - egress fees, discounts, interoperability and software licensing in the cloud - and invited comments from the major players. AWS did too.

The EU anti-trust team and competition authorities at the US Federal Trade Commission are also running investigations into Microsoft's cloudy licensing offers. ®

https://www.theregister.com//2024/03/08/cispe_microsoft_licensing_complaint/