Microsoft slammed for hitting European cloud users with ‘unfair, additional’ charges
European enterprises and public sector organisations are spending billions of kilos additional every year for the privilege of working software program they personal within the Microsoft Azure public cloud, suggests analysis revealed by non-profit Cloud Infrastructure Services Providers in Europe (CISPE).
The analysis, carried out by Frédéric Jenny, emeritus professor of economics on the ESSEC Business School in France, got down to set up how the general public cloud market’s present setup could enable unfair and anti-competitive practices to thrive.
It additionally, as said within the accompanying 53-page report, sought to supply a qualitative analysis of the “economic harm” incurred by clients on account of these “potential abuses”.
Its findings had been based mostly on the suggestions shared by massive software program users from throughout Europe, mixed with an evaluation of the pricing they had been subjected to, prompting Jenny to conclude “unfair, additional costs” are being levied on clients who decide to license software program to run within the public cloud.
“As a model … the cost to license Microsoft’s SQL Server in an independent cloud with the cost of the same software running on [the] Microsoft Azure cloud [was compared],” stated CISPE, in a analysis be aware. “[It was] found the additional charges levied on those choosing a non-Microsoft cloud sucked an additional €1,010,394,489 out of the European economy in 2022.”
The report additional discovered that making use of the identical price comparability mannequin to Microsoft’s cloud-based productiveness suite, Office 365, resulted in surcharges being utilized to users that ran the software program in non-Microsoft clouds environments totalling €560m per yr.
“This equates to a 28% premium of tax on the software licence, just for the pleasure of using it on a third-party cloud,” it added. “With dozens, if not hundreds, of software products seen as essential to the business operations, and [the] accelerating shifts to the cloud across the public and private sector, Microsoft could be adding hundreds of billions to the cost of digital transformation in Europe.”
The situation may be traced again to a Microsoft licensing-related coverage change in 2019 that stopped clients from deploying on-premise Office 365 licenses on third-party infrastructure. According to the report, this transfer could have generated an estimated €560m in first-year license repurchase prices for European enterprises.
“An additional surcharge of €1bn, relating to licensing surcharges imposed on non-Azure deployments of SQL Server, may further be attributed to the policy change,” stated the report.
“If this Microsoft tax equals €1bn per year for just one product among potentially hundreds, the overall cost to the European economy as it looks to move enterprise and productivity computing to the cloud must be estimated to be significantly higher.”
Digital transformation
It goes on to make the purpose that this extra spend is cash that could possibly be used to speed up the tempo of digital transformation for European enterprises and, within the case of the general public sector, that is taxpayers’ cash that’s being “unfairly diverted to already-dominant players”.
And these additional prices could go away some end-user organisations with no selection however to make use of Microsoft’s personal cloud, which is anti-competitive.
In gentle of the report’s findings, its creator is now calling on the European Commission to take motion and “end these unfair, unnecessary, unilaterally applied software license taxes”.
“Customers must be allowed fair choice to run the software they license in whichever cloud they want, free of technical, financial or legal penalties,” it added. “The 800-pound gorillas of the software world must not be allowed to leverage their dominance to capture the emerging world of cloud computing and squash the innovative European new entrants.”
Computer Weekly contacted Microsoft for a response to this text, however – on the time of writing – no response has been forthcoming.
The emergence of the analysis coincides with the publication of a letter despatched by Google to the Federal Trade Commission accusing Microsoft’s licensing phrases of forcing clients to make use of the software program big’s Azure public cloud platform.
“With overly complex agreements that seek to lock in clients to their ecosystems … [Microsoft] are not only forcing customers towards a monolithic cloud model, but also limiting choice, increasing costs for customers, and disrupting the growing and thriving digital ecosystems in the US and around the world,” wrote Google in an excerpt of the letter, published by US news site CNBC.
