Microsoft Changes its Cloud Licensing Policies to Appease EU Cloud Providers

Microsoft announced this morning that it was changing its cloud licensing policies to address complaints from European cloud providers. Three years ago, the company announced new outsourcing licensing terms that made it more expensive for customers to run Windows, Windows Server, or Office on competitor’s cloud platforms. After listening to feedback from EU cloud providers, Microsoft finally acknowledged that it needed to do better.

“Some of the most compelling feedback for me personally came from a CEO who said that he felt that he “was a victim of friendly fire in Microsoft’s competition with Amazon.” It was hard to hear this – but he was right,” Microsoft President Brad Smith admitted today.

In a quite surprising exercise of self-reflection, the exec also quoted recent numbers from the Financial Times showing that while AWS and Microsoft were the leading cloud providers and still growing, the competition was struggling to keep up.

“Especially as the largest tech companies have invested more in their infrastructure and services, the biggest challenge has been for smaller cloud providers, like those headquartered in Europe that have expressed concerns about our licensing practices and their ability to compete. While these companies have been growing, it has been at a rate lower than the market as a whole,” Smith acknowledged.

The exec announced this morning the following new initiatives to better support European cloud providers:

• Microsoft will help EU cloud providers to offer customers Windows and Office as a complete end-to-end solution hosted on their own infrastructure.
• Cloud providers will also be able to provide this end-to-end solution to customers who want to purchase Windows and Office from other Microsoft partners and want to host on a European Cloud provider.
• Microsoft will provide its customers more pricing flexibility by expanding the range of its products that can be offered at fixed pricing for longer terms.
• Microsoft will also make it “easier than ever” to license Windows Server on virtual environments by changing the legacy software licensing practices that tied licenses to physical hardware.

“To make these changes as effective as possible, we will create a new team that will work directly with European Cloud Providers. This team’s mission will be to help this community achieve its goals, provide licensing and product roadmap support, and continue to support their growth around cloud solutions,” Smith also said today.