The Billion Euro Strain: Unfair Software License Taxes Weigh Heavily on EU Customers

Professor Jenny's report, titled "Unfair Software Licensing Practices: Assessing the Impact on Cloud Customers," exposes surcharges exceeding 20% on software prices, resulting in over one billion Euros in additional costs for a single essential Microsoft software product.

Professor Jenny's latest research reveals that European businesses and public sector organizations are paying billions of Euros in additional costs to run their software on non-Microsoft cloud infrastructure. Comparing the licensing costs of Microsoft products like SQL Server and Office 365 Suite between independent and Microsoft Azure clouds, Professor Jenny found significant premiums for non-Microsoft cloud users. These additional charges stem from policy changes like Microsoft's 2019 BYOL alteration, resulting in substantial repurchase costs for European markets. The study suggests that unfair software licensing practices by dominant companies hinder innovation and digital transformation, forcing customers into proprietary ecosystems and limiting choice. Regulatory intervention is needed to promote fair competition and protect consumer interests in the cloud computing market.

One, speaking about the fear of potential reprisals for speaking out, commented:

“We are dealing with a market that is very close to what you have in organized crime scenes, to the point where you are risking your career if you say something.”

There are no technical reasons why prices are higher for software licensed to run on independent cloud infrastructure, but rather that price differentials are engineered to raise rival’s costs.

“There is pricing distortion in the market. When [my company] chooses to execute its workloads on third-party clouds it costs significantly more than on native [Microsoft] infrastructure.”

Several products, including SQL Server, Microsoft Dynamics and Active Directory, are used as gateway products to steer customers into an exclusionary Azure ecosystem.

“Microsoft leverages users’ familiarity with its products to drive adoption of the Azure ecosystem […][and has] a stance against users deploying Microsoft products on non-Azure infrastructure.”

Plus, as one respondent noted on key metrics such as latency and downtime, Azure performs less well than competitive clouds – yet customers are still pushed towards forgoing those competing services because of the price implications of selecting them.

Another added that the inability to license Office 365 to work with competing virtual desktops forces customers to switch to Windows Cloud PC rather than the preferred 3rd party cloud.

Jenny reflects the language of many of his respondents when he concludes that:

“The dependency on Microsoft products can be such that certain respondents characterize the relationship with the software and cloud provider as a “marriage,” from which it is extremely difficult to create conditions of escape.”

Professor Jenny's latest study provides ample evidence for the Commission to promptly intervene and put an end to the unjust and arbitrarily imposed software license surcharges. Customers should have the freedom to run their licensed software on any cloud platform without facing technical, financial, or legal repercussions. The dominant software giants must not exploit their market power to monopolize the evolving cloud computing landscape and stifle the emergence of innovative European newcomers.