Microsoft offers ‘pay-as-you-go’ software concession to cloud rivals after bowing to pressure
Microsoft will allow its cloud rivals to offer ‘pay-as-you-go’ software to their customers after bowing to pressure over its licensing practices.
The US tech giant attracted criticism for the way it offered exclusive software deals to customers of its Azure cloud platform, which rivals said made it difficult for them to compete.
But in a deal struck with the Cloud Infrastructure Services Providers in Europe (CISPE), a group representing European cloud providers, CISPE members will now be able to offer Microsoft software to their customers on a pay-as-you-go basis, producing pricing conditions more comparable to those offered by Azure.
CISPE members will be able to offer the software without sharing customer details with Microsoft – addressing a core concern raised by the group.
“The agreement we reached with Microsoft marks a significant breakthrough in our long-standing efforts to ensure a level playing field,” said Francisco Mingorance, secretary general of CISPE.
“For enterprise customers, the new programs directly address previous concerns of CISPE members and empowers European enterprises to choose among a wide range of cloud solutions that meet their sovereignty, compliance, and economic needs.”
Microsoft did not respond to a request for comment.
Cloud market probe
The cloud practices of the $3tn tech firm have come under intense scrutiny in recent months, including by major rivals Google and AWS.
Responding to a UK competition watchdog probe into behaviours in the cloud market, Google said that Microsoft’s licensing restrictions prevent it and others from competing for most of this addressable market, adding: “urgent and timely action is necessary to address Microsoft’s practices.”
Amazon’s AWS said there is “a history of cloud providers and customers being unhappy with Microsoft’s conduct,” adding that Microsoft’s “conduct is artificially imposed and could be easily fixed”.
Microsoft insisted that the cloud market “is highly dynamic and rapidly evolving”.
“Customer satisfaction is high, there is fierce competition between cloud service providers which drives down prices, and market participants are investing heavily in AI capabilities to stay relevant and competitive,” Microsoft added.
Microsoft said licence fees for its software do not materially raise costs for its competitors, adding that the available evidence indicates that AWS and Google have ample margin to compete with its Azure platform.
“We remain steadfast in our commitment to empower our partners and customers with greater choice and control over their data. By working closely with CISPE and our European partner community, we strive to innovate our products, business models, and strengthen our opportunities together,” Lars Johnson, General Manager of Business Planning at Microsoft, said.