Cloud Vendor Lock-in: Research Exposes Impact of Restrictive Licensing on Business Choices

A recent study sheds light on the challenges businesses face when considering a switch of cloud providers due to restrictive licensing practices. The research, conducted by Savanta and sponsored by the Computer and Communications Industry Association (CCIA Europe), surveyed 1,242 IT decision-makers across France, Germany, Spain, the Netherlands, and the UK. Despite the potential for significant growth in the cloud market (with only 22% of respondents fully embracing cloud services), the desire for flexibility in choosing cloud vendors is hindered by licensing constraints.

Among those contemplating a switch, 40% expressed concern that existing licensing terms prevented them from transferring on-premises licenses to a different vendor, while an additional 40% feared losing discounts. Notably, the report, funded by CCIA, which includes representatives from major tech players like Google, Amazon, and Mozilla, focused on Microsoft’s practices. It highlighted Microsoft’s dominance in the public sector, with 65% of organizations relying on its productivity software, and 58% of non-public organizations utilizing Microsoft’s applications.

Examining the situation in the UK, the report found that 65% of users of Microsoft’s on-premises software anticipated choosing Azure, and 32% reported receiving free cloud services offers. While the report refrained from directly accusing Microsoft, it emphasized that existing relationships with the company were a significant factor preventing organizations from switching cloud providers. In the Netherlands, 55% of respondents cited existing licensing terms as a reason for not transitioning, and a similar sentiment was echoed by 52% in Germany.

Beyond the impact of licensing restrictions, brand familiarity also played a crucial role, especially in France, where 48% of respondents preferred sticking with what they knew. However, the specter of licensing limitations loomed large, with one in five French organizations attributing their inertia to existing licensing terms.

Microsoft’s software licensing practices have faced scrutiny, including a 2022 complaint from the Cloud Infrastructure Service Providers in Europe (CISPE) trade group. Despite attempts by Microsoft to address concerns through licensing changes, critics, including CISPE, argue that discriminatory pricing is diverting customers from European providers to Microsoft. XM XM XM XM XM XM

A Microsoft spokesperson responded, stating, “We’ve made significant changes to our licensing globally based on discussions with partners and customers, and we will continue to actively listen to them and to regulators.” However, it’s worth noting that these changes don’t apply to major cloud providers like Google, AWS, and Alibaba, potentially creating challenges for smaller providers in the competitive cloud market.