Microsoft changes cloud licensing in the EU on Oct. 1, 2022

[German]On October 1, 2022, Microsoft will change its licensing terms for its cloud offerings in Europe. These changes are intended to make it easier for cloud service providers to compete with Microsoft. This is probably a reaction to complaints about Microsoft to the EU antitrust authorities. That's because cloud service providers from Germany, Italy, Denmark and France have likely filed complaints against Microsoft with the EU Competition Commission.


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Microsoft has published a post Easily bring your licenses to the cloud on the topic as of Aug. 29, 2022, in which the company announces some changes related to cloud licensing. Starting Oct. 1, 2022, Microsoft will introduce upgrades to its outsourcing and hosting terms that will allow customers to move their licenses (for Microsoft products) to a partner's cloud or use shared hardware. The approach is intended to provide more flexibility in deployment options for Microsoft software licenses. Here are the announced changes:

  • Customers with Software Assurance or subscription licenses will be able to use their own licensed software to build and/or install solutions and run them on any cloud provider's infrastructure (1). This is intended to give customers more flexibility to run their software in multi-tenant clouds starting October 1. 

    (1)The changes exclude the cloud providers listed in (1) above, Alibaba, Amazon Web Services, Google and Microsoft. Customers who want to use a listed provider for outsourcing can purchase licenses directly from the listed provider.

  • Customers with Software Assurance or subscription licenses are given the option to license Windows Server on a virtual core basis. With this model, customers can purchase licenses only for the virtual cores they need (subject to a minimum amount per VM) without being tied to a physical number of cores on the server. The virtual core-based licensing option allows customers to license Windows Server based on the number of virtual cores they use in virtual machines, making it easier to license Windows Server when virtualizing or outsourcing.
    Virtualization of Windows 10 or Windows 11 is made easier with the elimination of the Virtual Desktop Application (VDA) add-on license for Microsoft 365 F3, Microsoft 365 E3 and Microsoft 365 E5 users. This will help customers who want to virtualize Windows 10 or Windows 11 on servers and don't have a primary Windows Pro device.
  • Under the new Flexible Virtualization benefit, customers can work with partners in the Cloud Solution Provider program to get pre-built hosted desktop and server solutions. Customers can either bring their own license or obtain the license from the partner. A Microsoft customer agreement with the participating partner and proof of license are required to run these hosted solutions. 

Customers now have the choice of one- and three-year subscriptions for many products, including Windows Server, Remote Desktop Services (RDS) and SQL Server, through partners in the Cloud Solution Provider program to provide pricing stability with long-term subscriptions, according to the Microsoft announcement. How this all plays out in terms of pricing will have to be seen.

The move is a response to a 2019 complaint to the EU Competition Commission from cloud service providers in Germany, Italy, Denmark and France. Microsoft's corporate blog says it "recognizes the importance of a competitive environment in the European market for cloud providers where smaller competitors can thrive." Brad Smith, president and vice chairman of Microsoft, had therefore already announced changes in May 2022. The changes to licensing terms are intended to make it easier for customers to bring their software to the partner's cloud. In addition, Microsoft wants to ensure that partners have access to the products they need to offer cost-effective solutions for customers. Let's wait, untill we see the price tags.


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