Microsoft is currently "off track" when it comes to making changes to its licensing terms in Europe, an association of cloud providers has warned.

The European Cloud Commission Observatory (ECCO), set up by the Cloud Infrastructure Service Providers in Europe (CISPE) to monitor the implementation of changes to Microsoft's licensing practices, says the tech giant has work to do to meet commitments it made in a settlement last year.

The ECCO's first report has designated Microsoft's status as "amber," meaning that it is currently off track to meet the agreed-upon changes to its practices.

In July 2024, Microsoft settled an antitrust complaint from CISPE, which argued that the company's contracts were harming the European cloud computing market.

Microsoft paid €20 million ($21.7m) to settle the deal, as well as agreeing to develop a product - Azure Stack HCI for European cloud providers (Hosters) - that enables CISPE's members to run Microsoft software on their platforms at equivalent prices to Microsoft's.

The company also agreed to compensate CISPE members for lost revenues related to their licensing costs for the last two years.

The ECCO was set up to monitor the progress of those commitments.

On Azure Stack HCI, the first report from ECCO noted: "Should these benefits not be available through a product, or if the product is not viable within a nine-month period, then alternative commercially equivalent solutions, available through existing programs should be considered."

The progress has been broken down into five categories: CISPE member eligibility in Microsoft direct partner programs, which was awarded Amber; hoster product development and SPLA program support and sustained competitiveness, both of which were awarded Red; and the guarantee of flexible virtualization benefit availability and migration license support for CISPE members, which received Green.

The Microsoft direct partner programs have seen Microsoft establishing a "comprehensive testing and assessment program," but CISPE engagement has not been uniform with many members finding it "problematic" to access the pilot.

The hoster product development saw Microsoft and CISPE hold a workshop in December 2024 during which they discussed the needs of the product, however, ECCO is "concerned" that not enough work has been done on the product to meet the agreed requirements and deadlines.

The ECCO report said that "Subsequent communications (in early 2025) have suggested that Microsoft is still 'processing and evaluating' and 'digesting' these requirements," adding that Microsoft's engineering teams have argued that they have a 'very long list of things they are working on' outside of the CISPE product and are even 'pushing' existing offerings as a solution such as Azure Local which would still require an Azure presence and license for each of the cloud provider’s customers.

"This is unacceptable to CISPE members," said the report.

In addition, the report accuses Microsoft of increasing prices in a way that is "contrary to the intent of the MoU" it agreed with CISPE, and calls on Microsoft to "act in good faith and maintain both the spirit and the letter of the MoU to ensure that no new price discrimination is added between SPLA licensing of its software independent of absolute pricing and that which is available on Azure."

Microsoft argued that disconnected software and connected cloud systems are "different" and should not be compared regarding pricing.

The report summarizes that "the situation is not yet critical, and ECCO remains positive that the project can be put back on track," adding that: "Microsoft will need to engage quickly to keep earning CISPE members’ trust and co-develop a path forward."

The report stated that Microsoft disputes the criticism, and is "concerned that CISPE members are anchored on a product definition that goes beyond the scope of the pilot and that narrow focus will block successful co-development opportunities."

In a statement commenting on the ECCO report, Microsoft said: “We are committed to ensuring a successful relationship with the European cloud community and a strong, durable, and collaborative partnership with CISPE. We are reviewing the ECCO report and will work together to chart a path forward with CISPE and its members.”

Nicky Stewart, senior adviser to the Open Cloud Coalition (OCC) said of the report: “CISPE’s settlement with Microsoft does nothing for the majority of European cloud customers. Despite claims of progress, nothing has actually changed in terms of fair software licensing for the broader market. To solve these issues, the only real option is urgent and robust antitrust enforcement that levels the playing field.”

The OCC was launched in October 2024, describing itself as an alliance of leading cloud providers and users that aims to improve competition, transparency, and resilience within the cloud industry. Microsoft has accused the OCC of being a "shadow campaign" by Google designed to "discredit Microsoft with competition authorities, and policymakers and mislead the public."

While the ECCO was primarily set up to review the Microsoft/CISPE MoU, it is also evaluating Broadcom and its software licensing practices.

The first report for Broadcom saw the company awarded Red.

The ECCO wrote in Broadcom's report: "Since March 2024, CISPE has campaigned for Broadcom to reconsider its brutal and unacceptable changes to license agreements for the essential VMware virtualization software used by many of its members and cloud customers across Europe."

It notes that legal proceedings against Broadcom have been initiated in national commercial courts, and that customers have been forced to accept Broadcom's licensing terms for VMware as they are unable to replace it and continue serving their customers.

"ECCO supports urgent calls for a formal investigation into Broadcom’s unfair software licensing," the report concludes, noting that the observatory has seen "no direct or formal engagement from Broadcom."

Though ostensibly representing European cloud providers, CISPE counts Amazon's AWS, the public cloud market leader, among its members. Francisco Mingorance, secretary general of CISPE, said:

“Last summer, CISPE and Microsoft came to an agreement that sought to end unfair software practices and to create new benefits for all European cloud infrastructure service providers. But, any agreement is only as good as its execution, so we created ECCO to ensure that commitments made were delivered. This report is an important part of that process.

“The case with Broadcom is completely different, and regulators must be reminded that enforcement action is sometimes essential to curb ongoing unfair practices. In today’s geopolitical context it is imperative that the rule of law should not be compromised in hopes of defusing potential trade tensions.”