In early June 2025, Microsoft reached a widely publicized agreement with the Cloud Infrastructure Services Providers in Europe (CISPE), aiming to resolve a long-standing antitrust dispute. At face value, the settlement appears to be a stride toward fostering competition within Europe’s cloud ecosystem. However, beneath the surface lies a deal that seems tailored to protect Microsoft’s market dominance while offering very little relief to the customers most affected by its licensing restrictions.
This article begins a three-part exploration into the implications of Microsoft’s settlement with CISPE. In this installment, we analyze the historical backdrop that led to this moment, unpack the agreement’s core components, and evaluate why the settlement may not yield meaningful change for enterprises using non-Microsoft clouds like Amazon Web Services (AWS), Google Cloud, or Alibaba Cloud.
A Brief Retrospective: How Microsoft Cornered the Cloud
Microsoft’s cloud strategy has evolved rapidly since its early Azure offerings. By 2019, Microsoft introduced a series of licensing changes that placed notable constraints on customers wishing to run Microsoft software—such as Windows Server and SQL Server—on rival cloud infrastructures.
These “outsourcing restrictions” created a two-tiered system in which customers hosting Microsoft software on Azure were granted more favorable pricing and flexibility than those using competing platforms. These rules meant that even enterprises with existing software licenses faced higher costs and legal ambiguity when deploying those products on non-Microsoft cloud environments.
As more organizations transitioned to hybrid and multicloud architectures, they began to experience the full weight of these limitations. What was initially perceived as a minor licensing nuance gradually revealed itself as a deliberate strategic move by Microsoft to tether software and cloud platform usage tightly together.
The Catalyst: CISPE’s Antitrust Complaint
In November 2022, CISPE—a European cloud association that counts many small to mid-sized cloud providers as members—filed a formal complaint with the European Commission. The complaint accused Microsoft of anti-competitive behavior, particularly in how it bundled software licensing in ways that punished customers for selecting third-party cloud providers.
CISPE argued that Microsoft was distorting competition by using its software dominance as leverage to coerce cloud customers into adopting Azure. Their case emphasized how Microsoft’s practices affected pricing transparency, vendor choice, and market innovation.
The legal proceedings dragged on for more than two years, accompanied by Microsoft’s public relations efforts to mitigate criticism. In response to mounting scrutiny, Microsoft introduced a set of “European Cloud Principles,” which promised to create a more level playing field. However, many industry analysts and customers viewed these principles as superficial, as they lacked any commitment to allowing full portability of licenses to major competitors such as AWS, Google, or Alibaba.
The Settlement: What Was Agreed
In June 2025, Microsoft and CISPE announced a settlement agreement. According to public statements, Microsoft would pay CISPE $22 million—reportedly to cover legal expenses incurred over the three-year legal campaign. Additionally, Microsoft committed to developing and launching an “enhanced version” of its Azure Stack HCI platform, specifically tailored for European cloud service providers. This version, dubbed Azure Stack HCI for Hosters, is expected to include several features:
- Multi-session Virtual Desktop Infrastructure (VDI) capabilities based on Windows 11
- Complimentary Extended Security Updates (ESUs)
- Pay-as-you-go SQL Server licensing
These enhancements are intended to help smaller European cloud providers offer Microsoft workloads more competitively, particularly in government and enterprise environments.
CISPE also announced the creation of a new body: the European Cloud Observatory. This independent entity will monitor Microsoft’s delivery on its commitments and evaluate compliance. It will include representatives from cloud vendors, customer groups, and Microsoft itself.
The Fine Print: Exclusions and Implications
Despite the apparent goodwill in the agreement, critical details expose the limitations of this resolution. Most notably, the settlement excludes hyperscalers such as Amazon, Google, and Alibaba. These so-called “Listed Providers” are not entitled to any of the concessions outlined in the agreement. This caveat has sweeping implications.
First, it leaves out the largest segment of cloud customers: those using AWS and Google Cloud. These platforms represent a massive share of the European enterprise cloud market. Any licensing flexibility or cost reductions that exclude these players effectively bypass the issue at the heart of the CISPE complaint.
Second, the agreement contains a clause that prevents CISPE and its member companies from initiating or supporting future antitrust actions against Microsoft on this matter. While this shields Microsoft from further legal trouble with CISPE, it also means that affected customers must either seek redress individually or hope that other regulatory bodies, such as the European Commission, will pick up the baton.
Industry Reaction: A Mixed Chorus of Skepticism
Responses from analysts, customers, and competitors have ranged from lukewarm to openly critical. Wes Miller, a seasoned analyst at Directions on Microsoft, called the deal “hollow,” suggesting it resolves little beyond neutralizing a legal threat. “It’s a maneuver that gives some perks to smaller providers but ignores the broader impact Microsoft’s licensing has had across the cloud ecosystem,” Miller remarked.
Moreover, the deal’s timing and backroom dynamics have drawn scrutiny. Reports emerged suggesting that Google attempted to intercept the CISPE agreement by offering a rival package. According to a Bloomberg report, Google proposed more than $500 million in long-term software license value and an additional $15 million in direct payment to CISPE, hoping the association would continue its fight against Microsoft. CISPE declined, possibly swayed by the more immediate certainty of Microsoft’s offer.
This behind-the-scenes bidding war raises questions about whether CISPE prioritized short-term financial recovery over long-term structural change. It also underscores how high the stakes are for cloud dominance, especially in Europe’s increasingly regulation-conscious environment.
The Customer Perspective: Where Is the Relief?
Perhaps the most glaring omission in this settlement is the lack of any concrete benefit for existing enterprise customers using non-Microsoft cloud infrastructure. These users are still constrained by the 2019 outsourcing rules and continue to face elevated costs when attempting to run Microsoft software on AWS or Google Cloud.
Customers hoping to retain their licensing investments while migrating to modern cloud environments are once again left in limbo. The settlement’s focus on enabling “authorized outsourcers” means only a narrow segment of Microsoft’s broader customer base may see any price or service improvements.
The lack of retroactive license portability also frustrates organizations that already restructured their cloud architectures under the burden of Microsoft’s prior restrictions. For them, the settlement offers no reparations or roadmap for normalization.
Azure Stack HCI for Hosters: A Strategic Decoy?
Microsoft’s promise to deliver a special version of Azure Stack HCI for European hosters may be interpreted by some as a good-faith effort to support the local cloud market. But others view it as a calculated distraction. While enhanced features like multi-session VDI and pay-as-you-go licensing are appealing, they come with caveats.
For instance, the Azure Stack HCI platform, even in its improved form, is still a Microsoft-controlled stack. While it may technically reside on third-party infrastructure, its architecture and licensing tie customers more deeply into Microsoft’s software and update cycles.
This controlled autonomy can blur the line between independence and dependency. Customers deploying Microsoft workloads on HCI for Hosters will still face Microsoft’s oversight on support, security, and compatibility. Thus, rather than expanding customer freedom, this solution may simply repackage Microsoft control in a different box.
The Regulatory Angle: What’s Next for the EU?
Although this deal ends CISPE’s direct complaint, it does not absolve Microsoft from broader scrutiny. The European Commission retains the authority to launch its own investigation or expand existing probes into Microsoft’s cloud licensing practices.
Recent history suggests the Commission is paying closer attention to digital markets and dominant tech players. With the Digital Markets Act (DMA) now in full effect, regulators have more tools at their disposal to evaluate whether practices like license bundling and service self-preferencing constitute a breach of fair competition laws.
Whether Microsoft’s current settlement preempts a deeper regulatory response remains to be seen. However, the sheer scale of dissatisfaction among customers suggests this issue is far from resolved.
A Settlement That Sidesteps the Core Problem
The Microsoft-CISPE settlement may check a box for legal resolution, but it fails to address the root problem affecting thousands of European cloud customers: licensing bias. By excluding major cloud providers and focusing on a narrow segment of smaller hosters, the agreement provides limited utility to the broader market.
Enterprises hoping for a rebalancing of cloud competition or more equitable software deployment options will have to wait—and perhaps advocate more loudly—for regulatory action. This episode serves as a cautionary tale about the limitations of industry-led agreements, especially when they involve stakeholders with differing levels of power and influence.
In the next part of this series, we will delve into the technical and economic implications of Azure Stack HCI for Hosters and examine how this offering compares with truly independent cloud infrastructure alternatives.
The Heart of the Settlement
The cornerstone of Microsoft’s recent settlement with the Cloud Infrastructure Services Providers in Europe (CISPE) is the forthcoming release of a modified cloud platform—Azure Stack HCI for Hosters. Marketed as a boon for smaller European cloud providers, this new version of Azure Stack HCI aims to replicate the capabilities of Microsoft’s own cloud infrastructure, promising multi-session virtual desktops, extended security updates, and pay-as-you-go flexibility.
But as with many corporate concessions, the devil is in the details. This article examines whether Azure Stack HCI for Hosters genuinely fosters competition in the European cloud ecosystem or simply reshapes Microsoft’s control in a more palatable form.
What Is Azure Stack HCI?
Azure Stack HCI (Hyper-Converged Infrastructure) is Microsoft’s hybrid cloud platform designed to bridge on-premises data centers with the cloud. It enables businesses to run virtualized workloads on their own infrastructure while retaining integration with Azure services like monitoring, backup, and cloud-based updates.
In essence, Azure Stack HCI lets customers run a Microsoft-optimized private cloud, often used for Virtual Desktop Infrastructure (VDI), SQL Server workloads, and other latency-sensitive applications. It’s become a popular option for enterprises with data sovereignty concerns or edge computing needs.
With the new Azure Stack HCI for Hosters, Microsoft intends to open this platform to a broader swath of European cloud service providers. The goal: allow these providers to deliver Azure-consistent services under their own branding and infrastructure.
The Promise: Flexibility and Local Empowerment
Microsoft’s announcement outlines a few high-value capabilities that will be embedded into the hoster-tailored Azure Stack HCI:
- Multi-session Windows 11-based VDI
- Extended Security Updates (ESUs) for legacy Windows workloads
- SQL Server pay-as-you-go licensing
- More affordable access to Microsoft software on non-Azure platforms
These features may appear liberating at first glance. They allow hosters to offer Microsoft-centric workloads without incurring the higher license premiums previously associated with non-Microsoft clouds. Smaller providers could, in theory, offer a compelling alternative to Azure, AWS, or Google Cloud within European markets.
This strategy seemingly aligns with European policymakers’ ongoing push for digital sovereignty—a movement emphasizing data control, cloud independence, and localized innovation. Microsoft’s move can thus be read as a calculated attempt to satisfy regulatory appetite while maintaining commercial dominance.
The Pitfall: Who Controls the Stack?
Despite these improvements, the question remains: How independent is a hoster running Azure Stack HCI for Hosters? The answer, unfortunately, remains ambiguous.
Azure Stack HCI still remains tightly coupled with the Azure ecosystem. Even though the infrastructure may be physically operated by an independent provider, the control plane, update channels, and licensing policies are all fundamentally governed by Microsoft. Consider the following:
- Mandatory Azure Arc Integration: All Azure Stack HCI deployments must connect to Microsoft’s Azure Arc for configuration and lifecycle management.
- Centralized Patch and Update Controls: Updates to the platform and its components come exclusively through Microsoft channels.
- Usage Monitoring: Microsoft retains visibility over usage data for licensing and billing purposes, raising concerns about data transparency and vendor lock-in.
In effect, while providers may own the hardware, Microsoft owns the rules of engagement. This leads some critics to argue that Azure Stack HCI for Hosters is a Trojan Horse—offering localized infrastructure while embedding deep dependency on Microsoft’s licensing and ecosystem.
Competitive Cloud or Subcontracted Azure?
To understand the strategic implications of this release, one must compare Azure Stack HCI for Hosters with existing alternatives in the market. Traditional infrastructure-as-a-service providers like AWS and Google Cloud offer compute, storage, and networking with robust tooling—but they do not condition usage of third-party software with platform preference.
In contrast, Microsoft’s hybrid model actively steers customers toward using its software stack with Azure-aligned technologies. While Azure Stack HCI for Hosters may provide a facade of choice, the actual autonomy of the provider is constrained by:
- Platform exclusivity: Only Microsoft software benefits from the added features. Linux and open-source tools receive no equivalent incentives.
- Licensing asymmetry: Hosters still pay more for deploying Microsoft software on other stacks unless they participate in this specific framework.
- Restrictive ecosystem: Providers are indirectly pushed to abandon competing hypervisors (like VMware) and container platforms (like Kubernetes not linked to Azure).
These conditions make it harder for hosters to cultivate true diversity in their service offerings. Instead, they risk becoming second-tier Azure operators under the guise of independence.
The Political Optics: Appeasing Europe Without Structural Reform
Europe’s regulatory climate has grown increasingly wary of American tech hegemony. Initiatives like Gaia-X and the Digital Markets Act (DMA) reflect Europe’s desire to protect its digital autonomy. Against this backdrop, Microsoft’s settlement with CISPE and its tailored HCI offering appear carefully crafted to signal cooperation while sidestepping deeper scrutiny.
By enabling local providers to offer Microsoft workloads under a sanctioned program, Microsoft can claim to be decentralizing its power. However, this decentralization is largely cosmetic if the operational control and policy decisions still emanate from Redmond.
Moreover, Microsoft’s proactive offer to fund CISPE’s legal fees and participate in a new “European Cloud Observatory” further bolsters the appearance of good-faith collaboration. But critics argue that these moves serve more to defuse legal pressure than to instill true market plurality.
Customers in the Middle: What Do Enterprises Gain?
For European enterprises caught between licensing constraints and vendor lock-in, Azure Stack HCI for Hosters might seem like a step forward. The ability to run Microsoft workloads with more flexibility and fewer premiums is certainly welcome.
But the real benefits depend heavily on how transparent and fair the new terms are, and whether hosters can genuinely compete with Microsoft on price and performance. There are also unanswered questions about:
- Migration complexity: Will customers using standard Azure services be able to shift seamlessly to a hoster’s HCI platform?
- Support parity: Will hosters have the same SLA guarantees and escalation paths as Microsoft’s own support teams?
- License portability: Will customers still face friction when reassigning their Microsoft licenses across different platforms?
If Microsoft continues to control the licensing rules, pricing schemes, and technical standards, customers may experience only superficial freedom—without any real escape from monopolistic dynamics.
A Cloud Observatory Without Teeth?
As part of the settlement, Microsoft and CISPE agreed to create a European Cloud Observatory—a watchdog-style consortium meant to oversee the rollout and implementation of Azure Stack HCI for Hosters.
This observatory is slated to include cloud vendors, user groups, and Microsoft representatives. Its mission: monitor product development, ensure transparency, and evaluate the practical impact of the settlement.
However, skeptics worry that the observatory could become little more than a symbolic body. Unless it is granted enforcement powers, regulatory backing, or an independent audit mechanism, its ability to course-correct Microsoft’s behavior remains in doubt.
Furthermore, Microsoft’s inclusion in the observatory itself raises concerns about impartiality. If the subject of oversight has a seat at the table, can the body truly safeguard competition?
The Competitor’s View: Google and AWS Push Back
Notably, major players excluded from the agreement—particularly Google Cloud and AWS—have been vocal about their disapproval. Google, which reportedly offered CISPE over $500 million in long-term licensing deals and cash to continue its legal challenge, remains active in lobbying for a more open licensing model.
Google officials have stated that they “remain committed to pursuing other avenues to challenge Microsoft’s unfair practices.” This implies continued engagement with European regulators, consumer advocacy groups, and potentially new litigation.
AWS, meanwhile, has continued to emphasize its own platform’s openness, contrasting it with what it perceives as Microsoft’s coercive tactics. Both companies are betting that European authorities will eventually clamp down on Microsoft’s preferential licensing—even if CISPE has now exited the battlefield.
Innovation or Illusion?
Azure Stack HCI for Hosters arrives as a shrewd compromise—designed to placate regulators, reward compliant partners, and maintain Microsoft’s dominant cloud trajectory. While it may provide marginal gains for smaller European hosters, its fundamental architecture still roots customers within Microsoft’s sphere of influence.
The platform’s very design—centralized updates, required Azure Arc connections, and licensing entanglements—undermines the promise of real competition. For enterprises, the decision to adopt this model must be weighed carefully against the broader implications of platform dependency.
In our installment, we’ll look at the regulatory implications of this settlement, the looming actions by the European Commission, and whether this deal represents the beginning of a shift in cloud governance—or just another missed opportunity.
A Settlement That Solves Little
When Microsoft and the Cloud Infrastructure Services Providers in Europe (CISPE) announced their settlement, it was framed as a resolution—an end to years of contention over unfair cloud licensing practices. But for many stakeholders across the European cloud ecosystem, the deal resembles a diversion more than a decision. The broader question remains: Will European regulators take decisive action to curtail Microsoft’s grip on the cloud market?
This final installment explores the regulatory landscape surrounding the Microsoft-CISPE settlement. We’ll examine the European Commission’s position, assess Microsoft’s strategic maneuvers, and evaluate whether real change is possible in an environment increasingly shaped by a few American tech giants.
Microsoft’s Licensing Model: The Core of the Controversy
Microsoft’s cloud licensing policies lie at the heart of the antitrust storm. Since 2019, Microsoft has introduced measures that make it significantly more expensive—or, in some cases, practically impossible—to run its software on non-Microsoft cloud infrastructure.
Key practices that triggered regulatory alarm include:
- Restricting bring-your-own-license (BYOL) capabilities on platforms like AWS and Google Cloud.
- Charging additional fees for running Microsoft software outside of Azure.
- Imposing unfavorable terms for Windows Server and SQL Server deployments on competing environments.
- Designating “Listed Providers” (Amazon, Google, Alibaba) as ineligible for licensing advantages offered to smaller hosters.
These tactics created an uneven playing field, effectively coercing customers toward Azure even when alternate cloud solutions may have been more appropriate.
The CISPE complaint, filed in 2022, accused Microsoft of unfair self-preferencing and abusing its dominant market position—both violations under the EU’s competition law, particularly Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).
The Role of the European Commission
Europe has historically been far more assertive in reining in Big Tech than other jurisdictions. Past decisions against Microsoft have resulted in billions in fines and forced changes to how the company operates in the region. Given that legacy, many expected the European Commission to take a hard line on cloud licensing abuses.
However, the settlement with CISPE may have pre-empted a full regulatory process. By reaching an agreement outside of formal litigation, Microsoft arguably weakened the urgency or necessity of a sweeping investigation—at least in the immediate term.
That said, the Commission has not yet closed its docket. It continues to monitor the issue and may still pursue action under broader digital competition frameworks such as:
- The Digital Markets Act (DMA): Microsoft may be considered a “gatekeeper” under this legislation, subjecting its licensing and bundling behaviors to special scrutiny.
- New investigations or complaints: Other cloud providers, particularly those excluded from the CISPE deal like Google and AWS, may launch their own formal proceedings.
- Market inquiries: The Commission has the power to initiate sectoral probes into the broader cloud infrastructure market.
Thus, while the CISPE settlement may stall one path, others remain open.
The Digital Markets Act: A Tool Waiting to Be Used?
The Digital Markets Act, which came into force in 2023, was created to address exactly the kind of market asymmetry seen in Microsoft’s cloud licensing model. The DMA targets systemic anti-competitive behavior by companies with entrenched control over key digital services.
Microsoft, now officially designated as a gatekeeper, falls squarely within the DMA’s remit. Under the act, gatekeepers must:
- Avoid self-preferencing their own services over those of competitors.
- Allow fair access to essential software and infrastructure.
- Refrain from locking customers into proprietary ecosystems.
In this context, Microsoft’s restrictive licensing policies could be challenged as non-compliant with the DMA’s transparency and interoperability provisions. If found in violation, Microsoft could be required to revise its pricing, terms, and platform compatibility in Europe.
Despite this, the European Commission has yet to initiate a DMA-based enforcement action specifically targeting Microsoft’s cloud licensing strategy. Some observers suggest that the CISPE agreement may be a calculated move by Microsoft to defuse political momentum for a broader DMA case.
But critics insist that regulators cannot rely on settlements to shape market structure—especially when those settlements exclude major players and lack enforcement teeth.
CISPE’s Settlement: A Strategic Concession?
CISPE, representing many mid-tier European cloud infrastructure companies, initially positioned itself as a fierce opponent of Microsoft’s licensing policies. However, its decision to accept a $22 million settlement and withdraw support for any future cases raises serious questions about the organization’s long-term commitment to open competition.
Notably, CISPE’s agreement explicitly excludes Amazon Web Services, Google Cloud Platform, and Alibaba from any benefits. These companies continue to face the full brunt of Microsoft’s restrictive licensing without reprieve.
The net result: Microsoft fragmented the opposition, securing peace with one coalition of critics while leaving its strongest competitors isolated. This divide-and-conquer approach is familiar in corporate legal battles, but in the context of Europe’s digital sovereignty ambitions, it seems particularly cynical.
It also raises an important point: Private settlements cannot substitute for systemic regulation. The underlying practices that prompted CISPE’s complaint have not been universally corrected—only selectively negotiated.
Reactions from Competitors: Silence or Subversion?
In the wake of the CISPE deal, Google has emerged as the most vocal opponent. It reportedly offered CISPE over half a billion dollars to continue pursuing the case, indicating a strong interest in overturning Microsoft’s licensing model through judicial or regulatory means.
Google has stated that it will continue to explore “other options” to hold Microsoft accountable, including filing its own complaints or collaborating with independent regulators. AWS, while more reserved publicly, is known to be monitoring the situation closely.
The broader cloud community now faces a difficult choice:
- Wait and see if regulators act, or
- Proactively band together to challenge Microsoft’s licensing structure anew.
Given the fragmented nature of the European market—with hundreds of cloud providers operating independently—coordinated opposition is difficult but not impossible.
What Should Regulators Do Now?
For European regulators committed to fostering digital competition and cloud independence, inaction is no longer an option. The CISPE settlement may have complicated the picture, but it also presents a clear fork in the road.
The European Commission should:
- Open a DMA-based investigation into Microsoft’s cloud software licensing to determine whether it constitutes illegal self-preferencing.
- Evaluate the market impact of Azure Stack HCI for Hosters and whether it actually enhances or undermines competition.
- Mandate greater transparency in Microsoft’s licensing terms, including standardized BYOL rules across all cloud providers.
- Ensure that gatekeeper behavior is monitored consistently and not subject to selective enforcement.
- Establish a public framework for evaluating future settlements involving dominant tech vendors, especially those that affect digital sovereignty.
Only through decisive regulatory intervention can Europe ensure that its cloud ecosystem remains open, competitive, and genuinely sovereign.
Conclusion:
Microsoft’s CISPE settlement is not the conclusion of a licensing war—it is merely the latest skirmish. While it has bought Microsoft time and diluted opposition, the core grievances remain unresolved for the broader cloud community.
The danger now is complacency. By settling privately with one faction, Microsoft risks co-opting the regulatory narrative without truly reforming its behavior. And unless the European Commission takes proactive steps—leveraging the Digital Markets Act and other legal frameworks—this could become a textbook case of how Big Tech deflects oversight through strategic appeasement.
For European enterprises, cloud providers, and policymakers, the imperative is clear: don’t mistake temporary relief for structural reform. Microsoft’s cloud licensing monopoly remains intact. It’s up to regulators and competitors alike to decide whether that remains the status quo.