The European Cloud Competition Observatory (ECCO) released its second report on Microsoft on May 16, 2025, maintaining an “Amber” rating for the tech giant’s progress in addressing unfair software licensing practices. The report marks a significant transition in the agreement between the Cloud Infrastructure Service Providers of Europe (CISPE) and Microsoft, as both parties acknowledge the conclusion of the first phase of their July 2024 agreement.

The Failed Product Solution

According to ECCO’s assessment, Microsoft has failed to deliver on its initial commitment to create a specialized “Hoster Product” that would have addressed the concerns of European cloud infrastructure providers. This product was intended to level the playing field for CISPE members who have long complained about Microsoft’s licensing practices driving customers toward Azure and away from competing cloud platforms.

“It is disappointing that the proposed product did not deliver, but this is not the end of the Agreement,” said Francisco Mingorance, secretary general of CISPE, as reported by CISPE’s official announcement. “Phase 2 opens the door to discuss alternative, commercially equivalent solutions that enable CISPE members and Europe’s cloud infrastructure providers to compete fairly, while still offering Microsoft’s productivity tools to their customers.”

The Path Forward

The tech giant now faces a July 10, 2025 deadline to propose commercially equivalent alternatives. These solutions must address several key areas of contention, including free Extended Security Updates (ESU), unlimited virtualization, multi-session Virtual Desktop Infrastructure for Windows, and pay-as-you-go SQL licensing, all delivered through existing licensing channels.

The Register reports that this represents “Phase 2” or “Plan B” of the agreement. Despite the setback with the product-based solution, CISPE’s official position remains optimistic, with the organization stating it is “confident in a positive and meaningful outcome within the terms of the Agreement.”

Ongoing Tensions in Cloud Competition

A core issue highlighted in the ECCO report involves the Service Provider License Agreement (SPLA) program. CISPE members contend that SPLA product price increases are disproportionate compared to Azure license pricing trends. Microsoft maintains that there are fundamental differences between disconnected software and connected cloud services in terms of delivered value.

This development comes amid broader challenges for Microsoft in the European market. TechRadar reports that Microsoft has also missed an April 2025 deadline to deliver a secure EU-specific version of Azure, further complicating its European operations.

Industry Reaction

Not all industry voices share CISPE’s measured optimism. Nicky Stewart, senior advisor to the Google-supported Open Cloud Coalition, offered a more critical perspective to The Register: “Microsoft has a track record of delaying, deflecting, and offering superficial commitments to avoid real change. Meanwhile, it further consolidates its dominant position. This case is no different. The ECCO process is no substitute for formal antitrust enforcement.”

The Register also revealed interesting background context, noting that “Google had actually offered larger payment to CISPE not to settle the complaint,” but CISPE chose Microsoft’s proposal because it promised to address the core licensing issues.

What’s at Stake

The outcome of these negotiations has significant implications for cloud competition in Europe. The agreement between CISPE and Microsoft included an unspecified payment to the trade association, which CISPE will retain regardless of whether Microsoft fulfills its commitments under the Memorandum of Understanding.

As the July deadline approaches, the European cloud industry will be watching closely to see if Microsoft can produce alternatives that genuinely address the competitive imbalances that European cloud providers have been fighting against, or whether more formal antitrust action might eventually be necessary.