CISPE criticised over securing preferential cloud pricing on Microsoft products for members

A European trade body is facing criticism for striking a deal with Microsoft that allows its members to host and resell the software giant’s cloud offerings with preferential pricing terms.  

The Cloud Infrastructure Services Providers In Europe (CISPE) trade body has reached an agreement with Microsoft that will see its members offered revised pricing terms for running the supplier’s software – namely Windows Server and SQL Server – on their infrastructure.

Specifically, CISPE members will be able to offer customers access to Microsoft’s cloud offerings on a pay-as-you-go basis via the company’s CSP-Hoster programme, with pricing described as “comparable” to that offered by Microsoft Azure.

The agreement – which is open to existing and prospective CISPE members – also features an assurance that CISPE members will not have to share details with Microsoft about the customers they are selling the setup to.

Microsoft has also committed to reviewing the initiative’s effectiveness within 12 months, and said it may expand the programme in future.

What’s significant about the CISPE deal is that Microsoft has previously, and repeatedly, come under fire from trade bodies and regulators across the world for its practice of charging more to users who choose to run its software in competing cloud environments.

On that point, CISPE previously filed a complaint against Microsoft in November 2022 with the European Commission’s Directorate-General for Competition (DG Comp), where it urged the organisation to open an investigation into the firm’s behaviour.

However, in February 2024, news emerged that Microsoft and CISPE had entered into a discussion about how to resolve its members’ concerns over the company’s alleged anti-competitive behaviour.

This, in turn, led to the controversial news several months later that CISPE had signed a $22m deal with Microsoft to withdraw its complaint in exchange for the company’s commitment to revising its cloud licensing terms.

As reported by Computer Weekly at the time, news of the agreement between the two parties prompted concerns from cloud market watchers who claimed the deal was exclusionary.

In a statement, CISPE secretary general Francisco Mingorance described the development as a “significant breakthrough” in its efforts to “ensure a level playing field” for cloud providers across Europe.

“For enterprise customers, the new programmes directly address previous concerns of CISPE members and empower European enterprises to choose among a wide range of cloud solutions that meet their sovereignty, compliance and economic needs,” Mingorance added.

However, outside of CISPE, the response to the news of its latest agreement with Microsoft to tackle its licensing practices has not been so warmly welcomed.

Ryan Triplette, executive director of the Coalition for Fair Software Licensing, which campaigns for fair and transparent licensing terms for cloud users, said this is another case of Microsoft offering “weak concessions” to dodge regulatory scrutiny.

“Every stalling tactic has just bought Microsoft more time to lock in customers with restrictive and anti-competitive licensing practices,” said Triplette.

“This is more smoke and mirrors from Microsoft: offer weak concessions in an attempt to avoid regulatory scrutiny and disingenuously pretend these actions promote European competition. Meanwhile, Microsoft continues to line its pockets at the expense of customer choice around the world.”

Meanwhile, Nicky Stewart, senior advisor to pro-competition advocacy group The Open Cloud Coalition, said the deal will do nothing to help users and providers who are not within the CISPE fold.

“This bilateral deal between Microsoft and a subset of European providers leaves the vast majority of UK and EU customers facing the same high costs and restrictions,” she said.  

“It does nothing to fix the underlying issue: Microsoft’s licensing practices that distort competition. Opaque side deals cannot deliver a level playing field. Only market-wide antitrust remedies will deliver real choice and fair pricing.”

The concessions apply only to CISPE members, with no clarity on whether other cloud providers across Europe will benefit. Is this a private deal for a select few? Who decides who gets access, Microsoft or regulators?

Mark Boost, CEO of London-based cloud provider Civo, said the agreement “raises serious questions about fairness and transparency” and it is difficult to see how the wider market will benefit from it.

“The concessions apply only to CISPE members, with no clarity on whether other cloud providers across Europe will benefit. Is this a private deal for a select few? Who decides who gets access, Microsoft or regulators?” he said.

“Without these answers, it is easy to arrive at the assumption that this is a workaround that protects market power instead of challenging it.” 

In response to the criticism directed its way in the wake of news of the agreement being made public, a CISPE spokesperson said the agreement has the potential to benefit all European cloud providers – not just CISPE members.

“Clearly, we negotiated on behalf of CISPE and have won significant benefits for our European members when action by the commission seemed unlikely. That said, the agreement is open not only to current CISPE members, but eligible European cloud providers who join CISPE in the coming months,” the CISPE spokesperson said.  

“Moreover, Microsoft has committed to reviewing the programme’s effectiveness in its first year, with the potential to expand access thereafter. CISPE is in effect piloting a solution that, if effective, could benefit all European cloud infrastructure service providers in the near future.”

Computer Weekly also contacted Microsoft for comment on the agreement, with the firm’s general manager of business planning, Lars Johnson, describing it as a show of the company’s commitment to opening up new opportunities for its partners.

“We remain steadfast in our commitment to empower our partners and customers with greater choice and control over their data,” said Johnson.

“By working closely with CISPE and our European partner community, we strive to innovate our products, business models, and strengthen our opportunities together.”