Microsoft joins CISPE, the Euro cloud crew that tried to curb its licensing

Exclusive Microsoft is to become the latest member of CISPE months after negotiating a settlement with the trade association of European cloud providers over alleged anti-competitive software practices. However, not all in the group are happy with the enrollment.

A senior spokesperson for the Cloud Infrastructure Services Providers of Europe confirmed that its 39th associate will be the Redmond-based cloud and software titan, telling us the group is "representative" of the region's industry "and that includes hyperscalers."

"There are lots of areas where we are very much in alignment so it is useful to have Microsoft participate," he said, adding: "This is a step towards a greater CISPE."

Those areas of alignment include legislation on a Cloud Switching Framework to help cloud providers and their customers operationalize and automate compliance with the EU's Data Act.

The ten-strong board of directors at the trade body voted to allow Microsoft to join and members were to be informed at the next General Assembly on February 13, though we suspect communication was hurriedly sent out prior to this article. The spokesperson said, however, that the decision was not reached unanimously.

"AWS opposed Microsoft joining but it was outvoted by the board," he confirmed. The Register asked AWS to comment but it declined.

A spokesperson for Microsoft told us: "We are grateful to the CISPE membership for accepting our application as a non-voting adherent member and will continue to focus on building a constructive partnership that supports European cloud providers."

The lack of the ability to change policy at CISPE will no doubt give some comfort to other members, whose businesses are vastly smaller. For clarity, Microsoft's Intelligent Cloud vision generated revenue of $105 billion in its fiscal 2024 ended June 30.

CISPE – and separately, AWS – were public critics of Microsoft's licensing tactics, which they alleged involve charging up to five times more to run certain software in non-Azure clouds. The trade organization filed a complaint with the European Commission in November 2022 over this and the technical adjustment required to run some programs on third-party clouds.

After lots of tough talk from CISPE, Microsoft managed to win over the members and negotiated a confidential settlement, which was understood to include a cash payment of up to €30 million ($31 million), an enhanced version of Azure Local (formerly Azure HCI Stack), and suspension of Microsoft licensing audits for two years.

The European Cloud Observatory was established by CISPE to oversee any technical requirements, and the first progress report is due at the end of this month. Microsoft invited CISPE members to Redmond last month, but – on the surface at least – the three-day event appeared to be more about wine tasting than serious technical conversations.

The reason for CISPE existing is to promote data protection, ownership, and control for cloud users in Europe, a market dominated by AWS, Microsoft, and Google, which collectively have 70-plus percent market share.

One source close to the matter asked us: "What value can CISPE be for European cloud providers? It seems like a stooge for Microsoft now." For context, AWS was already counted among its ranks.

Another said: "There are some seriously pissed off people." Others asked what the addition means for the settlement reached between CISPE and Microsoft.

• UK govt office admits ability to negotiate billions in cloud spending curbed by vendor lock-in
• Microsoft: Our licensing terms do not meaningfully raise cloud rivals' costs
• Google veep calls out Microsoft's cloud software licensing 'tax'
• Euro cloud group blasts Broadcom over VMware licensing maneuvers

The CISPE spokesperson told us: "It was always part of the discussions that at some point Microsoft might want to join. If anything, it strengthens our hand. They are a member, we have a good ongoing relationship and are keen to deliver what they said they'd deliver. We need to get the settlement done, and this gives us more focus."

Google tried to join CISPE last year, as we revealed, offering financial incentives in the form of cash and cloud credits. Sources told us that Google wanted a seat on the board and for CISPE to continue the legal fight with Microsoft. Google subsequently joined the Open Cloud Coalition, which Microsoft claimed was a lobbying front that called for an end to "restrictive licensing" policies.

The former head of Google Cloud Platform described Microsoft's sales tactics as a "software tax," and CISPE previously commissioned research which found that the public sector and businesses in Europe pay up to €1 billion a year to run various types of Microsoft software in cloud environments outside of Azure.

Google has since filed its first complaint against Microsoft with the European Commission over the issue.

We asked Google to comment on the latest changes at CISPE. ®