News & Insights

CISPE: New Study links unfair software licences to distortion of competition in cloud infrastructure market

Today, Professor Frédéric Jenny, renowned expert on competition law, published a study that illustrates how unfair software licence terms enforced by certain legacy software companies can distort competition in the nascent market for cloud infrastructure services in Europe. The study documents practices through which a handful of companies with market power in enterprise, productivity and database software can steer business customers to their own cloud infrastructure services. If allowed to continue, the study suggests, these bad practices will significantly harm competition in the cloud damaging growth, innovation and viability of European cloud infrastructure providers, and the businesses that rely on them. Ultimately, this will lead to less choice and higher prices for cloud services for European consumers.

The study, which has been circulated to Members of the European Parliament, the European Commission and the Council as they examine, debate and vote on the Digital Markets Act (DMA), clearly indicates a number of practices used by legacy software firms to limit the choice of European businesses as they seek to move to the cloud. Technical, financial and contractual restrictions are employed to keep business users within the software providers’ own cloud infrastructure ecosystem, whether or not it provides the best solution for the customer. Typical license terms identified by Professor Jenny’s study as restricting fair competition include:

  • Removal of Bring Your Own Licence (BYOL) deals, meaning customers are forced to pay again to use software they already own on competing cloud infrastructure.
  • Bundling and tying software products with cloud infrastructure to make other cloud providers’ offerings less attractive/more expensive.
  • Contractually restricting the ability to use software in the most hardware efficient manner by forcing customers to dedicated cloud infrastructure.
  • Increasing prices for partners using their own cloud infrastructure whilst keeping them unchanged for partners selling on the software provider’s cloud infrastructure.
  • Artificially limiting data portability to make it expensive if not impossible to use competing cloud infrastructure.
  • Demanding customer information from cloud services’ partners for ‘billing purposes’ but then approaching those customers directly to solicit them to switch cloud infrastructure.

Commenting on his research, Professor Jenny said; “Over the course of several months I have spoken to business software users of all sizes and across sectors. Some users were fearful of possible reprisals if they spoke out against alleged unfair practices. Even some large users of cloud services recognised that they could not do without the core productivity suites that these software companies control.”

MEP Stephanie Yon-Courtin commented; “This is an important piece of research at a key moment from one of the world’s leading experts on competition. Professor Jenny’s work clearly illustrates the power of some legacy software companies to leverage their existing market power to distort the emerging market for cloud infrastructure in Europe. Nascent European cloud providers, business customers and consumers across Europe all deserve to be protected from these unfair practices. I urge my colleagues to read the report and consider its findings as the debate and vote on amendments to the DMA.”

Henri d’Agrain, Secretary General of Cigref, the French CIO Association which represents leaders in digitalisation in France, added; “This independent study by Professor Jenny, a recognised economist, objectifies the observations made consistently by Cigref members over many years. It provides a factual assessment of the economic consequences of the unfair practices that Cigref regularly denounces. It is important to regulate these practices, which are mainly carried out by non-European providers. These practices constitute an illegitimate drain on the European economy and contribute to stifling the digital innovation of European players through killing acquisitions.”

Dr. Hans-Joachim Popp at Voice, the German CIO Association said: “Clearly, several large software players seek to use their license agreements to limit competition and choices. Our members see this every day and are adamant that these practices are effectively prevented by the DMA.”

Simon Besteman, Managing Director of the Dutch Cloud Community, contributed: “The findings of Prof. Jenny’s research confirm what the Dutch Cloud Community has been seeing among its members for years. Licensing practices are being abused by parties with a de facto monopoly to strangle the independent cloud providers. Ultimately, if nothing is done, this will lead to the disappearance of the European Cloud Industry. It is essential to fight this abuse of power and restore a level playing field by including the principles of fair software licensing in the DMA“.

Carlos Mateo, President of Asociación Española de Startups, added: “This report is no surprise to our members. We have seen the stringent enforcement of one-sided and unfair software licensing terms by a few large vendors seeking to limit choice and exclude alternative providers for years. These practices cannot be allowed to extend where innovative businesses need the flexibility and choice of a range of suppliers in order to develop and deliver the next generation of services and products to people across Europe.

Alban Schmutz, Chairman of CISPE, concluded; “We’d heard from our members, and from their customers, that certain legacy software providers were limiting choice in cloud infrastructure through unfair license terms. We commissioned Professor Jenny to make a study of these practices and their impact, to support the Principle of Fair Software Licensing we crafted with Cigref. The Study clearly demonstrates the need for the Principles, and for the DMA to include them within its provisions. This is a significant issue which requires legislation as well as voluntary adoption of our Principles to ensure compliance and a better deal for European businesses and consumers.

Source: CISPE

As a healthcare software provider, our ability to utilize the cloud provider of our choice impacts more than just our business – it affects the health and well-being of patients everywhere. Restrictive software licensing imposes real-world threats like pricing increases that directly influence how we are able to assist healthcare providers and the patients they serve. We support the Principles of Fair Software Licensing to protect both cloud customers and the communities they serve.

Healthcare Technology Company

Cloud computing has brought low-cost, on-demand IT services to every corner of the economy, raising productivity and innovation levels at enterprises of all sizes. And intense competition and innovation among cloud providers continues to drive costs down while adding new customer capabilities.

But some incumbent IT vendors are imposing restrictive software licenses to limit how customers can take advantage of competing cloud offerings.

NetChoice supports the Principles of Fair Software Licensing as a roadmap to drive innovation, serve customers, and promote competition in IT services.


Frustration, use limitations, threatened audits, and significant additional expenses. That has been our experience with unfair software licensing. Organizations need transparency from their software providers.

We support the work of the Coalition for Fair Software Licensing to protect customers and ensure IT spend is effective and free from surprises.

Global Building Materials Supplier

Unfair software licensing practices in the cloud are a global issue, and CISPE is pleased that the Coalition for Fair Software Licensing is taking the Principles to North America.

Originally launched and jointly conceived by customers and cloud providers in Europe, we encourage customers around the world confronted with unfair software licensing practices to consider the Principles as a powerful framework for positive change.


As start-ups, it is essential that we retain flexibility to use the cloud infrastructures that fit best our aspirations and those of our customers. The Principles of Fair Software Licensing help the next generation of software and service providers to avoid lock in and ensure a fair playing field for all. Seeing their adoption in North America adds weight to this important movement for innovators in Spain and worldwide.

Carlos Mateo Enseñat

President, Asociación Española de Startups (AES), and Promoter of the NUBES Initiative in Spain

Developed in Europe by CIOs and cloud providers, the Principles of Fair Software Licensing are supported by digital organizations in Italy such as Assintel. Assintel welcomes the Coalition for Fair Software Licensing’s embrace of the Principles in North America. Fair licensing of software in the cloud is a global issue for businesses of all sizes. In Italy, our government recognises this challenge and just updated its antitrust bill to put an end to unfair software licensing practices.

Businesses in North America can benefit just as well as those in Italy from a best practice framework for software licensing.

Paola Generali

President, Assintel

As a longtime advocate for open systems and open networks, CCIA supports the competitive ideals reflected in the Principles of Fair Software Licensing for Cloud Customers as the Coalition embarks upon its efforts in North America.

Matt Schruers

President, CCIA

Some legacy software providers are attempting to extend their current on-premise market dominance into the cloud market through aggressive and restrictive contracts, licensing terms, and software audits.

While many promote ‘cloud freedom,’ in actuality they are employing tactics designed to lock out competition and innovation while increasing profits for themselves at the expense of their customers. No longer can legacy software providers be allowed to disguise their predatory practices.

I am proud to align myself with the Coalition for Fair Software Licensing in shining a light on these issues and putting forth actionable solutions.

Craig Guarente

Founder and CEO, Palisade Compliance

Despite the current spotlight on antitrust issues in Washington, behemoth software providers continue to misuse their legacy status and market power to target business customers with predatory audits and trap those customers in restrictive licensing agreements.

Through our practice — dedicated to representing software licensees against these very tactics — we have seen first-hand the real world effects of such licensing practices. Both growing and established companies are routinely kneecapped by unexpected costs, forced to waste immeasurable resources in spurious audit defense, and stymied in their efforts to make the technology changes they believe are necessary for their business.

We support the Principles of Fair Software Licensing and believe they represent an excellent and necessary step towards much needed business consumer relief and will help open the market to smaller providers in the cloud ecosystem.

Arthur S. Beeman & Joel T. Muchmore

Founding Partners, Beeman & Muchmore, LLP

Consumers benefit from a competitive, dynamic information technology marketplace. Competition drives innovation and ensures that customers get the benefit of fair pricing.

Overly restrictive, abusive licensing agreements from IT companies with market power, on the other hand, impose costs on government and corporate customers of reduced innovation and long-term price increases. We support the Principles of Fair Software Licensing and policies that encourage innovation, competition, and licensing practices that give customers the freedom to mix and match solutions from a wide variety of vendors.

This is particularly critical in the market for cyber security solutions since hackers are innovating every day, leveraging new strategies, new tactics, and new technologies to support their illegal campaigns. The only way to defeat nation states and trans-national criminal organizations is for the government to ensure that the IT market for cyber security is as competitive as possible and customers have the freedom to choose.

Cybersecurity Provider

The Alliance for Digital Innovation supports the Coalition for Fair Software Licensing’s efforts to protect customer choice and advocate for access to modern, secure commercial solutions.

As advocates for public sector customers, we think that government mission owners and enterprise information technology and cybersecurity leaders should have access to as many modern commercial solutions as possible.

These solutions are critical components to driving digital innovation and security in the public sector, and ADI supports removing barriers that slow adoption of those solutions, including restrictive licensing practices.

Alliance for Digital Innovation

As an attorney, I have represented enterprise software customers for years and have routinely seen enterprise software companies deploy predatory business practices, including falsely inflating alleged non-compliance gaps, to increase profits and limit customers’ ability to go elsewhere.

These practices produce causal effects throughout the economy including increased prices, as businesses across various sectors are forced to spend resources dealing with these unforeseen issues. I support the work of the Coalition for Fair Software Licensing to help my clients and enhance an economy that provides opportunities to all.

Pam Fulmer

Founder and Partner, Tactical Law Group LLP

We believe licensees should be able to deploy licensed software in a way that best suits their business, including their choice of cloud provider at no additional cost. Having experienced licensing practices inconsistent with the Principles of Fair Software Licensing, we support the Principles and urge others to support both them and the Coalition for Fair Software Licensing.

Insurance Industry Business

Startups, often operating with limited resources, need the freedom to assemble the technology infrastructure that best suits their needs.

Cloud computing infrastructure is central to startup growth, and the Principles of Fair Software Licensing will help maintain accountability, mitigate unnecessary costs, and promote innovation in this environment.

Industry-wide adherence to these principles will level the playing field for startups.


Get Involved

Learn more about joining the Coalition or expressing support for its Principles