Google veep calls out Microsoft's cloud software licensing 'tax'
- Reference: 1685615711
- News link: https://www.theregister.co.uk/2023/06/01/google_microsoft_cloud_complaints/
- Source link:
Amit Zavery, vice president, general manager, and head of platform at Google Cloud, says antitrust regulators are "starting to understand the situation" and are asking questions.
"Any enterprise company will be impacted negatively if things are not resolved properly," he told The Register . "I think there should be appetite [from the regulators] and I think there should be movement in that area to really put some kind of checks and balances on Microsoft's policies."
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Speaking out ... Google Cloud's Amit Zavery
One bone of contention for Google, the third-largest public cloud provider globally and in Europe, is that it simply costs more to run Microsoft software on third-party providers' clouds. This is due to extra licensing costs levied by Microsoft when you run its applications on non-Microsoft clouds, we're told.
"Microsoft publicly touts that if you run their software on Azure versus other vendors like AWS and GCP, it's five times cheaper or it's more expensive to run on us 5x basically because of the tax customers have to pay to Microsoft," Zavery told us.
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"The price of the products are the same in terms of infrastructure and everything else, so the licensing cost is more expensive because of using providers other than Azure," he added.
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"On premises, they could run it on any hardware, there was no restriction really. But now if you want to run it on any other cloud provider, you have to pay a tax and penalty to Microsoft if it's not running on Azure, or in the preferred providers of their choice.
If you want to run it on any other cloud provider, you have to pay a tax and penalty to Microsoft ... That is a big issue because all enterprises have a large footprint of Microsoft products like Office and Windows, SQL Server and others
"So that, I think, is a big issue because, of course, all enterprises have a large footprint of Microsoft products like Office and Windows, SQL Server and others as well, and if you don't allow that for products which have been paid for already by customers to be run anywhere, without paying a penalty to Microsoft, you're just getting getting beholden to Microsoft.
"That's the big, big problem for many enterprises today where they can't bring their licenses wherever they choose to. There is nothing technically preventing that from happening either. It's running on standard compute, which of course Microsoft allows for some cloud providers to use and run their products on, but not AWS, or GCP."
Office space
Microsoft is the only one of the big three cloud providers that has a huge installed base of customers that have been using its wares and services for decades before the cloud showed up. Microsoft's meteoric growth recorded with Azure was due to its "policies," the Google exec said.
"It shows you how much pull they have, that is the cost to customers, because they don't have a choice," he told The Reg .
Investigation
We spent some time in recent weeks collecting the thoughts of various sources across the industry on Microsoft's tactics, and many wanted to remain anonymous for fear of upsetting the IT giant. Some feared soft tactics being wielded against them by the Windows maker, such as discounts evaporating or the compliance team calling, if they spoke out.
The extent of Microsoft's ruthlessness to keep its base of legacy software customers locked within its empire – either on-prem or in Azure, or both – became all the more obvious following licensing agreement changes introduced in 2019, said one source, who also drew attention to Microsoft's marketing claims of Azure being five times cheaper to run SQL Server than, say, on a rival's racks.
"At least with SQL Server, customers have that choice, maybe it's a cost issue, but with SQL Server they have a choice. With other applications like Windows Server, Microsoft outright prohibited it back in 2019.
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"Very rarely are customers going to break up their license portfolios because of this patchwork of rules."
Microsoft's customers could run its wares on any cloud, but if they wanted to run it on shared infrastructure they needed to buy something called License Mobility that came via a Software Assurance license. Those with dedicated infrastructure did not. That changed in 2019.
"That was a double whammy for a lot of customers," our source claimed. "Dedicated infrastructure already costs more because you're having to buy out the entire server, whereas shared infrastructure, you only pay for what you need when you need it."
[6]CISPE rejects Microsoft's attempt to settle EU cloud licensing complaint
[7]EU monopoly cops probe complaints about Microsoft Azure
[8]Another cloud provider runs to shelter from Microsoft's licensing practices
[9]Microsoft may stop bundling Teams with Office amid antitrust probe threat
Added to this, Microsoft also created a targeted list of providers that the changes applied to, added a source.
"Microsoft basically targeted its three largest competitors. Listed providers in 2019 were designated as Google, AWS, Alibaba. Then Microsoft in a thinly veiled attempt to proclaim that this change was non-discriminatory, included itself in that list of listed providers."
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Customers with perpetual Microsoft licenses could no longer bring their applications to their cloud provider of choice – assuming they wanted to use AWS, GCP, or Alibaba. Instead, Microsoft created the exclusive Azure Hybrid Benefits program, meaning that while customers "technically" couldn't bring those licenses to Azure, they could exchange them for SaaS-based licenses for Azure.
"This was too cute by half with Microsoft now saying, 'Look, we're technically complying with the letter of this prohibition by not allowing these perpetual licenses to be brought to Azure.' But in reality, they were totally undermining the spirit of it by letting customers exchange those licenses for SaaS subscription of those applications."
This meant customers had to fork out to buy fresh licenses if they didn't want to run on Azure or tie themselves into a Microsoft subscription.
"Customers who have made considerable expenditures both from a capital, time, and IT resource perspective on these licenses want to deploy these licenses in the cloud, and Microsoft was saying, 'If you want to use these main competitors of ours, you no longer can, even though previously we had allowed it. If you want to use Microsoft's products on these platforms, you either need to pay some for Software Assurance, or rebuy."
Don't forget Amazon
AWS, via its membership of the Cloud Infrastructure Service Provider of Europe (CISPE) trade association, is also taking its gripes about Microsoft to the EU. CISPE [11]filed a complaint in November, and [12]this week rejected Microsoft's effort to settle the case, describing the offer as "pretty paltry" and saying it has an unspecified "minimum requirement" before it agrees to gather round the negotiating table.
Microsoft [13]settled in March a joint complaint brought by OVHcloud, Aruba S.p.a., and the Danish Cloud Community. The contents of that settlement are confidential and CISPE told us at the time they were "bilateral and secret" and it expected "something to be offered to everyone across the market."
Redmond-based Microsoft is also making conciliatory noises in other complaints raised, such as the one by Slack over the bundling of products. Specifically, Slack wasn't happy that Microsoft's rival chat app Teams is included in the market-dominant Office suite. Microsoft is, as a result, offering to charge different prices for Office 365 [14]with or without Teams or to potentially [15]pull the bundle entirely .
The Office E4 license, as an example of Microsoft's bundling of applications, contains around 30 products ranging from automation, security, and storage tools to analytics offerings and more, said Google's Zavery.
Bundling "creates damage to the other vendors… in that space [who] probably have technically better products in some cases as well, and they are not able to compete," he told us.
It may well be that a security vendor or identity and access management provider decides to file similar complaints to Slack and [16]Nextcloud , which complained to the EU about Microsoft bundling OneDrive with Office 365.
We have asked Microsoft to put forward an executive to interview. ®
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[1] https://regmedia.co.uk/2023/05/31/amitzavery.jpg
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZHjAlebQ7slMV16uBIluMQAAAJQ&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZHjAlebQ7slMV16uBIluMQAAAJQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZHjAlebQ7slMV16uBIluMQAAAJQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZHjAlebQ7slMV16uBIluMQAAAJQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://www.theregister.com/2023/05/30/microsoft_cispe_settlement_rejected/
[7] https://www.theregister.com/2023/05/16/eu_confirms_azure_complaints/
[8] https://www.theregister.com/2023/04/27/hyve_joins_cispe_microsoft/
[9] https://www.theregister.com/2023/04/25/microsoft_teams_office_bundling/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZHjAlebQ7slMV16uBIluMQAAAJQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2022/11/09/cispe_ec_microsoft_complaint/
[12] https://www.theregister.com/2023/05/30/microsoft_cispe_settlement_rejected/
[13] https://www.theregister.com/2023/03/30/microsoft_euro_complaints/
[14] https://www.theregister.com/2023/04/25/microsoft_teams_office_bundling/
[15] https://www.theregister.com/2023/04/25/microsoft_teams_office_bundling/
[16] https://www.theregister.com/2021/12/02/nextcloud_onedrive_interview/
[17] https://whitepapers.theregister.com/
Re: Would it not be cheaper for Google, AWS, Alibaba
If they were going to do that, it would have been done by now.
Re: Would it not be cheaper for Google, AWS, Alibaba
In other words people do things but never for the first time.
Re: Would it not be cheaper for Google, AWS, Alibaba
The problem with that is not replacing the functionality, it is migrating the huge amounts of existing data people have in MS systems and formats.
If what your trying to migrate is huge numbers of complex spreadsheets on individual PCs, plus everything in your mail and calender servers plus a custom .Net application or two that uses an SQL server back end, it will be a lot of work to move to a FOSS solution.
That is why you should use FOSS from the start - to avoid vendor lock-in.
Re: Would it not be cheaper for Google, AWS, Alibaba
OTOH for a new project - and people do have new projects - starting with FOSS would not only be possible but a good thing.
Re: Would it not be cheaper for Google, AWS, Alibaba
Won't help. People are too deeply wedded to MS applications. You cannot convince office workers who have been using MS Office for 25 years now that there's an alternative. They won't hear it. They're not interested in the technical reasons why some alternative is just as good, or even better, they only want Office. It's been their entire career and they will refuse to change.
Re: Would it not be cheaper for Google, AWS, Alibaba
And yet they did change when MS imposed a UI change. And they'll do so again any time MS repeats the tactic.
Re: Would it not be cheaper for Google, AWS, Alibaba
-> Won't help. People are too deeply wedded to MS applications.
So true. Alas I meet and hear a lot of open source advocates who simply do not understand the issue. It's easy enough for a one man band who writes a few letters in Word or works on a few Excel spreadsheets to move to LibreOffice, for example. But in a company where there is a long history of processes using Office, Outlook, SQL Server, it is a completely different prospect. We see it here in The Reg about people saying "try this distro, try that distro" when it comes to Linux. Pretty much all companies are not in the business of "trying distros", they just want to get on with their work.
Migrate to FOSS
As a SaaS provider we are gradually migrating everything over to FoSS - operating systems, databases, runtimes. So much simpler to manage as well as being about a third of the cost overall. Running cloud native architectures really helps too, rather than just porting your old microsoft SQL server over as-is.
Don't forget that there are some things - Azure Virtual Desktop springs to mind - where they won't license it at all for use on other cloudy hosting providers.
Break it up
Microsoft should be encouraged or forced (probably forced) to spin off the various parts of their enterprise in to separate entities. eg. OS, Office and other software, cloud, games, hardware, etc. etc. Until that happens MS have far too much clout over other vendors.
A golden opportunity to do this was missed when MS was convicted of being a monopolist - it's never too late.
"put some kind of checks and balances on Microsoft's policies"
No, Google, what you should be saying is "put some kind of checks and balances on Cloud Provider policies".
The rules should apply to all clouds, not just your competition.
Because I see what you're doing there, Google. You're just trying to climb to the #2 spot, and you do that by dragging down the others so as to float your own boat. Par for the course, as it were, but you're fooling no one. You're not doing this for your customers, you're doing it for your own bottom line.
Re: "put some kind of checks and balances on Microsoft's policies"
Big Tech needs reining in generally, not just the cloudy stuff.
Re: "put some kind of checks and balances on Microsoft's policies"
That's the literal definition of allowing competition and not allowing anticompetitive behaviour. There's nothing wrong with that.
What's wrong is that Microsoft prohibits *me*, as a user, to take *my* Windows license that *I paid for* and use it on a Windows VM on AWS or Google Cloud. But it allows me to do it on Azure (which, lets face it, isn't a great Cloud).
Microsoft being Microsoft
From the company that forcefully installed Edge on all PCs and used to ask for additional money in order to enable TCP/IP on Windows.
If Microsot were like booze, I'm happily tea-total!
15 years ago I stepped out of my college lecturing job and vowed I would never use another M$ product [the UK ICT and Computing A level syllabuses were awful and the implementation at my college was no more than just training students to use M$ products - it was just training, not education in the wider sense].
15 years later a Venn diagram of 'my computer usage' and 'Microsoft' would be two non overlapping circles.
(Assuming we ignore any web sites I visit, or vending machines & petrol pumps I use that run on Windows behind the screen - I can't help that.)
Isn't it possible to block mictosoft's ears so it doesn't know one is running on AWS et al instead of azure?
Would it not be cheaper for Google, AWS, Alibaba
to get together and produce free/FLOSS replacements to the MS software that their customers use in the cloud ?
They do not need to start from scratch, there is plenty that would need a few extra features and interfaces to allow the enterprises' applications to work.
Obviously it will be more work than I suggest but it does not need to be 100% compatible - just as long as the effort to port workloads is not too hard.
Releasing this as Open Source will be vital so that enterprises can test it in-house ... some may use it in-house as well.
Note: they do not need to replace everything that MS produces, just what most of the cloud customers need. Start with the easy low hanging fruit.
Yes: it will cost but being able to take customers from MS should result in an overall gain.