Microsoft Reaches Settlement Agreement With CISPE Over Antitrust Complaints
Microsoft Settles with European Cloud Trade Body Over Antitrust Complaints.
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Microsoft has reached a settlement agreement with the Cloud Infrastructure Services Providers in Europe (CISPE). This resolution comes nearly two years after CISPE filed an antitrust complaint with the European Commission (EC) against Microsoft. The complaint alleged that Microsoft was leveraging its market dominance to tie customers to its Azure cloud service by making it more expensive to run Microsoft software on rival cloud platforms.
The conflict began when CISPE, a European not-for-profit trade association, raised concerns about Microsoft's business practices. CISPE's core allegation was that Microsoft had used its dominant position in the business software market to create unfair advantages for its Azure cloud service. Specifically, the trade body claimed that a licensing change implemented by Microsoft in 2019 made it more costly for businesses to run Microsoft’s enterprise software on competing cloud platforms. The European Commission serves as the primary regulatory body overseeing competition laws within the European Union. CISPE’s antitrust complaint prompted the EC to scrutinize Microsoft's practices, raising questions about whether these actions violated EU competition laws designed to ensure a level playing field for all market participants.
Settlement discussions between Microsoft and CISPE commenced in April of the previous year, with both parties aiming to avert a protracted regulatory battle. Although the specifics of these early negotiations were not disclosed, it was clear that both sides were eager to reach a mutually agreeable solution. After approximately 15 months of negotiations, a memorandum of understanding was signed between CISPE members and Microsoft. As part of the settlement, Microsoft agreed to implement several changes to address the concerns raised by CISPE. These changes are aimed at fostering a more competitive environment for European cloud infrastructure providers.
Enhanced Version of Azure Stack HCI
One of the cornerstone elements of the settlement is the introduction of an enhanced version of Azure Stack HCI (Hyper-Converged Infrastructure) specifically tailored for European cloud providers. This enhanced version will include:
Multi-Session Virtual Desktop Infrastructure: Based on Windows 11, this feature will allow multiple users to access and use the same virtual desktop environment simultaneously.
Free Extended Security Updates (ESU): An essential feature for businesses requiring extended support for legacy systems.
Pay-as-You-Go Licensing for SQL Server: This flexible licensing model aims to lower costs and increase accessibility for SQL Server users.
To ensure the ongoing effectiveness and fairness of the implemented changes, CISPE announced the establishment of an independent European Cloud Observatory (ECO). The ECO’s mandate will be to monitor the development and continuous evaluation of the changes agreed upon in the settlement. Microsoft has been given a nine-month timeline to implement these adjustments. Francisco Mingorance, the Secretary General of CISPE, emphasized the victory for European cloud providers. In a statement issued to TechCrunch, Mingorance expressed optimism that the agreement would create a level playing field for European cloud infrastructure service providers and their customers.
Amazon Web Services (AWS), a notable member of CISPE, responded critically to the settlement. An AWS spokesperson pointed out that the selective application of changes to some CISPE members indicates that no technical barriers prevent Microsoft from making its software easily available to rival cloud providers. This viewpoint presents ongoing concerns about whether the settlement fully addresses the competitive imbalances in the cloud market.
Amit Zavery, the head of platform at Google Cloud, described the settlement as a "pay-off." Reports have suggested that Microsoft is paying as much as $22 million as part of the agreement. This financial aspect of the settlement has raised further questions about its implications for competition in the cloud services market.
Impact on European Cloud Providers
The settlement is expected to have a positive impact on smaller European cloud providers. By addressing some of the licensing and cost barriers that previously favored Microsoft’s Azure, the agreement could stimulate competition and innovation within the European cloud market. The introduction of pay-as-you-go licensing and other enhancements may lower entry barriers and operational costs for these providers.
Notably, the settlement does not include AWS, Google Cloud, or Alibaba, which are players in the cloud market but not members of CISPE. This exclusion raises questions about the overall effectiveness of the settlement in fostering broad-based competition across the entire cloud services sector in Europe. The omission of these major providers seemingly conflicts with CISPE's earlier criteria for negotiations, which stipulated that any settlement should apply to all cloud infrastructure providers operating in Europe. The establishment of the ECO represents a proactive step towards ensuring ongoing compliance and fairness in the cloud services market. However, the long-term success of this initiative will depend on the ECO's ability to effectively monitor and enforce the agreed-upon changes. Furthermore, the settlement may set a precedent for how similar antitrust complaints are handled in the future, potentially influencing regulatory approaches both in Europe and globally.
The settlement between Microsoft and CISPE marks a pivotal moment in the European cloud computing landscape. While it offers a promising step towards addressing some of the competitive imbalances in the market, the exclusion of major cloud providers like AWS and Google Cloud suggests that there is still work to be done to achieve comprehensive fairness and competition. The establishment of the European Cloud Observatory will play a crucial role in monitoring the implementation and effectiveness of the agreed-upon changes.
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