News & Insights

COALITION INSIGHT: Customer Need – Not Software Licenses – Should Dictate Cloud Choice

By Ryan Triplette, Executive Director, Coalition for Fair Software Licensing

This month, Microsoft changed the licensing terms for some of its most widely deployed software offerings. Microsoft first committed to change its terms in May of this year, seeking to address complaints lodged in both public and official forums by a growing chorus of companies and organizations in the European Union. Despite Microsoft’s repeated promises to “give customers more flexibility and choice,” these changes fail to address one of the biggest problems facing customers for the last three years: the use of software licensing terms to dictate which cloud providers customers can use, limiting choice and increasing costs.

From its inception, the cloud has allowed customers to freely bring the on-premise software they already own to whatever cloud providers they choose to best meet their business needs. This allowance, called, “bring your own license,” drastically reduced friction across customers’ cloud migration strategies.

In 2019, this freedom and flexibility ended. Rather than compete on the merits, Microsoft instituted a series of changes that made it more difficult— and expensive—for customers to bring their previously purchased Microsoft software to cloud providers other than Azure, specifically creating a new subset of Listed Providers which included Microsoft’s direct competitors in the cloud. As a result, customers had to navigate a web of deliberately complex and unfair licensing terms to determine the damage to their bottom line and digital transformation plans. Enterprises that purchased licenses for software such as Microsoft Windows Server, Windows Desktop, and Office were either prohibited from running the software on other cloud providers, or forced to purchase additional costly licenses. The message to customers was clear: Use Azure or pay more for your existing software.

In the years since, a growing number of companies and organizations—which the Coalition for Fair Software Licensing recently joined—have begun to work together to address the impact of restrictive and aggressive licensing practices. While Microsoft’s 2019 roll-back of cloud flexibility may have sparked the call to action, the effort and the solution presented is much broader; namely, for customers, partners, and providers alike to adopt the Principles of Fair Software Licensing to protect customer flexibility and choice in the cloud.

When Microsoft President and Vice Chair Brad Smith acknowledged problems with the company’s software licensing practices, he stated that the company’s goal was to “turn a long list of issues into a shorter list of issues.” But instead of addressing calls to adopt the Principles of Fair Software Licensing, Microsoft’s proposed changes add new layers of complexity, implementing even more programs and limitations that customers and providers alike are still struggling to comprehend. Simply put, Microsoft is creating two classes of cloud customers – one which are allowed “bring your own license” and another restricted from using the cloud provider of their choice. Despite promising to “give customers more flexibility and choice,” the new changes leave the majority of Microsoft’s software customers who have chosen not to use Azure in the same position they were in before.

The cloud offers unbelievable potential to transform nearly every industry. Software providers should be identifying opportunities to reduce barriers to digital transformation, enhance interoperability, and support budget efficiency for their customers. In the weeks since the changes took effect, though, we have not heard any organization state that the changes will provide them with either the flexibility, choice, or cost efficiency they need to realize the full potential of the cloud—and certainly not what they enjoyed in the pre-October 2019 world. For these reasons, we believe that organizations should remain wary of what the latest round of licensing changes mean to them and call for Microsoft to adhere to the Principles of Fair Software Licensing in their licensing negotiations.

If you have any questions about what these changes mean to your organization or would like to learn more about the Principles of Fair Software Licensing, please contact our team at [email protected].

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