New Microsoft-CISPE Deal Promises Fairer Cloud Competition in Europe

A trade group of European cloud providers has secured key concessions from Microsoft over its software licensing practices. Members of the Cloud Infrastructure Services Providers in Europe (CISPE) can now offer pay-as-you-go plans, match Azure pricing, and privately host customer workloads.

According to CISPE, this new agreement will allow members to offer Microsoft software to their customers on a pay-as-you-go basis via Microsoft’s Cloud Solution Program (CSP-H). This change will offer stronger privacy for customers of European cloud providers. It will also make pricing conditions for Microsoft’s products more comparable to those of Microsoft’s Azure cloud platform.

“The agreement we reached with Microsoft marks a significant breakthrough in our long-standing efforts to ensure a level playing field,” said Francisco Mingorance, Secretary General of CISPE. “For enterprise customers, the new programs directly address previous concerns of CISPE members and empowers European enterprises to choose among a wide range of cloud solutions that meet their sovereignty, compliance, and economic needs.”

Additionally, CISPE members will have access to a new product called Microsoft 365 Local, which will allow deployment on local cloud infrastructure. The trade group said that it would be a major step toward digital sovereignty for European customers. On the privacy front, this deal allows CISPE members to host Microsoft workloads as pay-as-you-go on independent European infrastructure without sharing customer details with Microsoft.

Ongoing limitations: Microsoft Entra ID and VDI restrictions

However, Identity management is still tightly coupled with Microsoft’s Entra ID (formerly Azure Active Directory). This means that European cloud providers who want to offer Microsoft 365 or similar services must use Entra ID for identity and access management. This technical tie-in limits the ability of European providers to offer alternative ID management solutions. Moreover, this deal doesn’t allow for Windows 10/11 VDI multi-session on European-owned multi-tenant infrastructure.

The new agreement applies to current CISPE members and eligible European cloud providers who join CISPE in the coming months. Microsoft plans to review the effectiveness of this program after one year and may expand access.

The backstory: antitrust pressure and the €20 million settlement

CISPE and Microsoft have made this agreement over two years after the trade group filed a formal antitrust complaint with the European Commission. The complaint alleged that Microsoft imposes higher charges for customers running its software on rival clouds. Last July, Microsoft and CISPE reached an agreement that required the company to develop a new Azure Local service and pay €20 million.

In May, however, the European Cloud Collaboration Observatory (ECCO), which is responsible for an independent oversight of the deal, released a report that described Microsoft’s offering as “disappointing” and gave an Amber rating.

The new agreement between Microsoft and CISPE has drawn criticism for benefiting only CISPE members, which leaves other European cloud providers uncertain about any potential advantages. Critics argue that the deal may be a strategic move by Microsoft to maintain its dominance through selective concessions, rather than genuinely promoting fair competition in the EU cloud market.