Microsoft’s Concessions to European Cloud Providers: A Stalling Tactic or a Step to Fair Competition?

A recent agreement between Microsoft and Cloud Infrastructure Services Providers in Europe (CISPE) has brought a new chapter to the long-running saga of antitrust scrutiny faced by the software giant in the region.^[2] After a formal complaint was filed in November 2022, Microsoft has offered a series of concessions aimed at appeasing European cloud providers who have long accused the company of anti-competitive licensing practices.^[2][3] However, the move has been met with mixed reactions, with some hailing it as a victory for European cloud providers while others dismiss it as a mere “stalling tactic.”^[2]

The core of the issue lies in Microsoft’s licensing terms, which European cloud providers have argued unfairly favor Microsoft’s own Azure cloud infrastructure.^[3] CISPE’s complaint to the European Commission detailed how Microsoft’s dominance in productivity software, such as Microsoft 365, was being leveraged to steer customers towards Azure, thereby limiting customer choice and hindering competition from smaller, local cloud providers.^[3] The complaint highlighted practices such as discriminatory bundling, tying of services, and technical and economic lock-in as key areas of concern.^[3]

In response to the mounting pressure, Microsoft has agreed to a set of concessions. A significant change is the introduction of a pay-as-you-go model for Microsoft software, including Windows Server and SQL Server, for CISPE members through the Cloud Solution Program (CSP-H).^[2] This is intended to offer more competitive pricing, comparable to what is available on Azure.^[2] Furthermore, a “Microsoft 365 Local” package is planned, which will allow CISPE members to deploy the popular productivity suite for their customers.^[2] Another key concession is a customer privacy agreement, which means European cloud providers can host Microsoft workloads without having to share customer details with the software giant.^[2]

These concessions have been hailed as a “significant victory” by CISPE, who believe they will bring lower prices and greater flexibility for customers of European cloud providers.^[2][3] The agreement has led to CISPE withdrawing its formal competition complaint against Microsoft.^[3] As part of the settlement, Microsoft has also agreed to make a lump-sum contribution to CISPE to cover the costs of the litigation and campaigns for fair software licensing over the past three years.^[3]

However, not everyone is convinced that these concessions go far enough. The Coalition for Fair Software Licensing has been particularly vocal in its criticism, branding the agreement as “smoke and mirrors” and a “stalling tactic.”^[2] Ryan Triplette, the Executive Director of the coalition, argued that the move is an attempt by Microsoft to avoid regulatory scrutiny while continuing to lock in customers with restrictive practices.^[2]

A major point of contention that remains unresolved is the technical tie-in between Microsoft’s Entra ID (formerly Azure Active Directory) and Microsoft 365.^[2] This means that even with the new concessions, customers will still be required to use Microsoft’s identity management solution to activate Microsoft 365 services, limiting their choice in this area.^[2] This “technical tie” is a significant hurdle for competing identity management providers and a source of ongoing frustration for European cloud companies.^[2]

The broader context of Microsoft’s operations in Europe is also important. The company has faced a number of antitrust investigations, including one that led to the unbundling of its Teams collaboration app from Microsoft 365 and Office 365 suites in the European Economic Area and Switzerland.^[4] This was in response to a complaint from Slack, a rival collaboration platform. Microsoft has also been under fire for changes to its licensing policies that made it more expensive to run its software on competitors’ clouds.

While the recent agreement with CISPE addresses some of the concerns of European cloud providers, it is clear that the battle for a truly level playing field is far from over. The establishment of a European Cloud Observatory, which will include Microsoft and representatives from the European cloud industry, is a step towards monitoring the implementation of the agreement and ensuring fair software licensing in the cloud.^[3] However, the fact that major players like Amazon Web Services, Google Cloud Platform, and Alibaba Cloud are excluded from the benefits of this agreement highlights the complexities and limitations of such bilateral deals.^[3]

Ultimately, the long-term impact of Microsoft’s concessions remains to be seen. While some see it as a positive development that will benefit European cloud providers and their customers, others remain skeptical, viewing it as a calculated move by a dominant player to manage regulatory pressure without fundamentally changing its business practices. The coming months will be crucial in determining whether this agreement is a genuine step towards a more competitive cloud market in Europe or simply a temporary truce in an ongoing war.

Sources

1. The Register, EU cloud gang wins Microsoft concessions, but fair software licensing group brands them ‘stalling tactic’, July 18, 2025, https://www.theregister.com/2025/07/18/cispe_microsoft_concessions/
2. CISPE, CISPE and Microsoft Agree Settlement in Fair Software Licensing Case, July 11, 2024, https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQFRaIEwLwxqYBIk4UZXrHkFh_gHbTAj6bkmJiUrsdvyoiLEGWEtjk-QRD73kPK3iDPFJlh5xCmjg2xHw771xwUs1fFQ3n_eDY8j_PJ1R7MO1DTrUMnH-E-hBmmdckksACvQ0LZC_eKRRPFDafZjBQWDRQpYa47BC__hTELxlXt2qYGfYonqUES8KEOXLAZdoYptWD7Q
3. ZDNet, Microsoft goes public with planned changes to undo restrictive cloud licensing policies in Europe, May 18, 2022, https://www.zdnet.com/article/microsoft-goes-public-with-planned-changes-to-undo-restrictive-cloud-licensing-policies-in-europe/
4. Techzine Global, Microsoft offers Europe new terms after complaint about licensing, July 11, 2025, https://www.techzine.eu/news/applications/121831/microsoft-offers-europe-new-terms-after-complaint-about-licensing/
5. Microsoft, Important Microsoft 365 licensing changes in Europe, October 1, 2023, https://blogs.partner.microsoft.com/partner/important-microsoft-365-licensing-changes-in-europe/