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Microsoft Changes Licensing Policies to Support Small Cloud Vendors

Rabia Noureen

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Cloud Computing

Microsoft has announced some important changes to its restrictive software licensing policies that should reduce the price of running Microsoft software on non-Azure clouds. The new licensing terms, which will go into effect on October 1, 2022, aim to address complaints from rival European cloud providers about Microsoft’s anti-competitive tactics.

“We recognize the importance of a competitive environment in the European cloud provider market, in which smaller competitors can thrive. It is therefore critical for us to remain mindful of our responsibilities as a major technology company,” explained Microsoft CVP Nicole Dezen.

Microsoft introduced some changes to its outsourcing license agreement in 2019. As a result, several European customers complained that Microsoft made it expensive to run Office, Windows, and Windows Server on non-Azure clouds such as Google Cloud Platform and Amazon Web Services (AWS). Last year, OVHcloud and some other cloud service providers filed lawsuits with the European Commission against Microsoft’s unfair licensing practices.

Back in May, Microsoft President Brad Smith acknowledged that he had listened to the criticism from European vendors, and some of these claims were valid. Smith pledged to make it easier for partners and customers to run Microsoft software on competing cloud services but didn’t mention when these changes would take effect.

Microsoft’s new cloud licensing terms to help partners build affordable solutions

In a blog post yesterday, Microsoft outlined several initiatives to help its partners build affordable solutions to support customers’ needs. Moreover, these policies should also enable partners to grow their businesses. “Partners have asked Microsoft to simplify licensing and to expand the range of products that can be offered to customers at fixed pricing for longer terms, and we’ve responded,” Dezen added.

First up, Microsoft is introducing a new Flexible Virtualization benefit for customers with Software Assurance or subscription licenses. It will allow them to leverage licensed software for developing and running solutions on any cloud environment (except Google, AWS, and Alibaba). Users will now only require a Microsoft 365 F3, E3, or E5 subscription to virtualize Windows 10 or Windows 11 editions.

The Flexible Virtualization benefit will also include a new Windows Server core licensing option. Previously, customers were required access to the physical server hardware to purchase Windows Server licenses. This release lets customers choose to license Windows Server on a virtual core basis. It should encourage businesses to move their legacy Windows Server workloads to the cloud.

Meanwhile, Microsoft has also announced some improvements for the Cloud Solution Provider (CSP) program. Partners will now be able to sell one or three-year subscriptions for Remote Desktop Services (RDS), Windows Server, SQL Server, and other products. We invite you to check out the official blog post for more details.

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