Microsoft changes licensing terms for cloud services in Europe after EU cloud dispute

Microsoft has presented new license terms for cloud providers in Europe, following criticism that the company has stifled competition in the cloud market. The new agreement is part of an ongoing dialogue with Cloud Infrastructure Service Providers in Europe (CISPE), an industry association representing over 30 independent cloud players, including Amazon Web Services (AWS) and now also Microsoft.

The dispute stems from the fact that Microsoft accused of charging higher fees from cloud providers that run the company's software – for example Windows Server, Exchange and SharePoint – on platforms other than Azure.

Why is Microsoft changing its licensing terms?

Already in 2022, CISPE sent a complaint to EU Competition Authority, where they argued that Microsoft's licensing model restricted competition and favored Azure. As a solution, Microsoft promised to develop a European version of Azure Local (previous Azure Stack HCI), with features such as:

• Windows 11 virtual desktops for multiple users.
• Free security updates for customers outside of Azure.
• Flexible SQL Server licenses on a “pay-as-you-go” basis.

However, Microsoft failed to deliver this within the agreed deadline, leading to new negotiations.

What does Microsoft's new offering include?

According to sources, Microsoft now has:

✅ Abolished the requirement to cloud providers send their customer lists to the company.
✅ Suggested lower fees for Service Provider License Agreement (SPLA).

Previously, Microsoft increased SPLA fees by 10% in January 2025, which drew widespread criticism from cloud providers in Europe.

CISPE comments:

“We have received Microsoft’s new proposal within the timeframe specified in the July 2024 agreement. It is now being reviewed, and a decision is expected in the coming weeks.”

How does this affect the cloud market in Europe?

The new agreement is economically rather than technicallyCritics say it remains to be seen whether Microsoft's new terms truly create a more level playing field for European cloud providers.

The biggest competitors to Azure – AWS and Google Cloud – they have also accused Microsoft of making it more expensive to run its software on other platforms. Google has even filed a separate complaint with the EU about the licensing terms.

The UK Competition Authority (CMA) and the US Competition Commission (FCC) also Federal Communications Commission (FCC) follow the question carefully.

A Microsoft spokesperson says:

“We are committed to building a strong, sustainable and collaborative partnership with CISPE and the European cloud community.”