• Billions of Euros are at stake as legacy software providers have the power to capture Recovery Fund Facility investment targeted at digital infrastructure.
• CISPE calls for gatekeepers’ enterprise software, not just operating systems, to be included to close this huge hole in the DMA’s effectiveness.

Brussels, 25^th November 2021. Over 2,500 of Europe’s leading CIOs, leading experts on competition, and numerous MEPs who filed amendments to include software in the Digital Markets Act, all recognise the need to end the unfair practices of some legacy software gatekeepers as they seek to limit choice of cloud infrastructure. 

Yet these unfair and damaging software licensing practices can continue unhindered because the software suites of software gatekeepers have been excluded from the Digital Markets Act.

This is a significant and damaging decision. As Europe embarks on deploying the massive €750 billion Recovery Fund Facility, it is expected to spend at least to 20%, €150 billion, on digital and cloud infrastructure. Unrestrained, the power of software companies to dictate which cloud infrastructure services are used with their legacy software threatens to divert much of that spending into the hands of a small number of dominant players and away from European alternatives. 

In a letter to MEPs, Cigref, Voice, CIO Platform and Beltug, which represent the views of nearly 2,500 of Europe’s leading CIOs and nearly 700 of the largest businesses and institutions in Europe clearly stated that: “Software gatekeepers should not use their market power to reduce contestability in the cloud infrastructure services market. Software is as critical as search engines or social media in the digital economy.”

This letter reflects the conclusions of Professor Jenny’s research, which we published earlier this autumn. That study highlighted the many ways in which legacy software providers, including Microsoft, Oracle and SAP can use their software licence agreements to limit customers’ choice of cloud infrastructure.

However, it is not too late to rescue the situation. Obligations already included in the report can easily be applied to enforce better behaviours by legacy software gatekeepers. Currently, the DMA’s scope covers only one category of software, namely ‘Operating Systems’.  Simply expanding this software category to ‘Software Applications,’ as already defined in the DMA, would ensure that the unfair practices of large legacy software providers acting as gatekeepers are fully captured by the DMA.

CISPE calls on all participants of the upcoming trialogue stage to work together to include this simple, but vital change to ensure that the Digital Markets Act lives up to its aspiration to create and protect a vibrant, fully contestable digital market in Europe.

The Danish Cloud Community hosts an event to celebrate its support of The Ten Principles of Fair Software Licensing for Cloud Customers, shedding light on the current efforts to modernize European regulation of digital markets.

Copenhagen, 24^th September 2021. On Wednesday 22^nd September, the Danish Cloud Community hosted an event to celebrate its support of The Ten Principles of Fair Software Licensing for Cloud Customers. With contributions from MEP Karen Melchior and Kim Jørgensen, head of cabinet for Margrethe Vestager, the event shed light on the current efforts to modernize European regulation of digital markets while it also provided examples of harmful effects of these unfair licensing terms.

Certain legacy software providers seek to use entrenched positions in on-premise software such as productivity suites, to restrict and direct the choice of customers to their own cloud solutions. The Danish Cloud Community and its members believe that such practices are unfair. Therefore, the Danish Cloud Community supports The Principles of Fair Software that have been developed by CISPE, the voice of cloud infrastructure service providers in Europe, as a way to counter these unfair practices.

The speeches of both MEP Melchior and Kim Jørgensen made it clear that the Digital Markets Act (DMA) is a significant moment in the evolution of the digital economy in Europe as it seeks to redress the balance between dominant ‘Gatekeepers’ (Tech Giants) and the wider ecosystem of innovators, customers and providers in the digital market. 

Along with CISPE and other European organisations, the Danish Cloud Community believes that Digital Markets Act and the Principles for Fair Software Licensing share a common ground. Therefore, the organisations support the DMA as originally proposed, all the while working actively to include some software specific additions in the requirements for gatekeepers under the DMA. 

During the event, Karen Melchior, MEP, said; “The DMA has an ambitious focus on interoperability. Cloud itself is a digital service so it is quite crucial that it is included in this work ensuring that businesses and consumers can collaborate and use services from multiple vendors.”

Kim Jørgensen explained; “The whole idea of the Digital Markets Act which the Commission adopted late last year is to address the negative consequences arising from platforms acting as digital “gatekeepers” to the internal market. The DMA establishes a set of narrowly defined objective criteria for qualifying a large online platform as a so-called “gatekeeper”. This allows the DMA to remain well targeted to the problem that it aims to tackle as regards large, systemic online platforms.” 

Commenting on the launch Jens E. Thorndahl, director, Danish Cloud Community said; “We’ve heard from our members and their customers over several years the difficulty they have in understanding and ensuring compliance with complex and onerous licence agreements with some legacy players. As they move to the as-a-service model of the cloud they are keen to step away from these terms and avoid the lock-in practices they’ve witnessed in the past. Speaking on behalf of the cloud vendors, we fundamentally support this, and we are committed to offering choice, transparency and fairness to all their customers.”

Francisco Mingorance, secretary general of CISPE, added; “The DMA is an historic opportunity to finally end harmful software licensing practices which have stymied growth and innovation for years. As Europe moves to a cloud-based, digital economy it is essential the MEPs and Commission act to ensure these practices are not allowed to transfer over to this new fast moving digital world.”

The Principles can be viewed and downloaded (in Danish and 18 other languages) from www.fairsoftware.cloud and the organisation is calling on Danish companies to use them in negotiations with their suppliers. It urges its members to do the same and embrace the Principles as core to a vibrant, competitive and fair market for cloud services in Denmark. 

For further information, please contact 

Jens E. Thorndahl, Director, Danish Cloud Community, +45 28 35 50 96 or jet@cloudcommunity.dk, or

Francisco Mingorance, Executive Secretary, CISPE, +32 476 977 153, francisco.mingorance@cispe.cloud. 

Alban Schmutz, Chairman of CISPE, explains how the initiative has highlighted the issue of unfair license terms and united both buyers and vendors.

The launch of the Ten Principles for Fair Software Licensing in the cloud marks the start of a campaign which we hope will gain momentum across Europe and beyond. Working with Cigref to unite both buyers and vendors of enterprise software we have successfully highlighted the issue of unfair license terms and their pernicious impact on the growth of the cloud. 

The launch was held under the patronage of French Minister for Digital, Cedric O, and attended by senior representatives from the French Assembly National (Madam Mirielle Clapot) and the European Parliament (Madam Stephanie Yon-Courtin) as well as leaders from some of France’s biggest organisations and leading cloud vendors. Delegates agreed on a number of key issues impacting the cloud and digital economy and recognised the value of the Ten Principles in seeking to address these.

First, it was clear to all who participated that we are at an inflection point in the development of the cloud and of the entire digital ecosystem. The cloud is far more than just another sector or aspect of the digital economy. It is one of the foundational elements without which progress will be stymied. Getting cloud right will open the doors to faster growth, more innovation and more jobs. But there is a real risk that legacy players, many of which have positions of great power in existing markets, capture these opportunities and restrict choice for their own benefits. Simon Besteman, Managing Director, Dutch Cloud Community summarised it neatly in our discussion: “The digitisation of the economy is the most important phenomenon for our economy. This evolution is facing ongoing obstacles that are artificially created by software providers eager to protect their position on the market and their revenue.”

“The digitisation of the economy is the most important phenomenon for our economy. This evolution is facing ongoing obstacles that are artificially created by software providers eager to protect their position on the market and their revenue.”

Simon Besteman, Managing Director, Dutch Cloud Community

Business software customers, including Cigref members are already seeing the efforts of certain software vendors to capitalise on the growth of the cloud as they create very strong synergies between deeply embedded legacy software, for example the productivity suites that many rely on for email, document management and databases, and their cloud offers. They use complex licence agreements and unfair pricing to ensure customers are directed away from competitive solutions. As Philippe Rouaud, Director of IT and Innovation at France Television, commented in his opening remarks; “It is not normal to charge a different price for the same software depending on the infrastructure chosen by the customer.” Yet this is precisely what some legacy software vendors are doing. 

“It is not normal to charge a different price for the same software depending on the infrastructure chosen by the customer.”

Philippe Rouaud, Director of IT and Innovation at France Television

But the damage and risk are not restricted to increased costs. Innovation is irreparably damaged by these unfair licensing practices. It is hard to look beyond the solutions pushed by incumbent vendors when they enforce licenses that make it commercially or technically difficult to go beyond their proscribed software stack. New entrants with exciting applications and different approaches are denied access cloud markets tightly controlled by legacy players. Businesses miss out on innovations that could drive growth or enhance service levels. 

Equally, internal innovation is also chilled. Not only do unfair licensing terms prevent access to platforms and services that could be used to develop new products, but licence costs can siphon off increasing proportions of free cash that could otherwise be invested in innovation. As Claude Rapoport, President of Belgian CIO organisation Beltug added “The main software providers operate globally and have the same practices across the different markets. Our members also complain about issues of software license management and commercial practices by providers.”

“The main software providers operate globally and have the same practices across the different markets. Our members also complain about issues of software license management and commercial practices by providers.”

Claude Rapoport, President of Beltug

The Principles for Fair Software Licensing in the cloud establish best practices that will prevent these distortions of the market and support a competitive and vibrant cloud marketplace. They are simple and non-controversial – a fact reinforced by the enthusiastic reception they have had from both users and many vendors. As Mirielle Clapot commented at the event; “This initiative is remarkable because it is supported at the same time by an association of cloud services users and an association of cloud service providers.”

“This initiative is remarkable because it is supported at the same time by an association of cloud services users and an association of cloud service providers.”

Mirielle Clapot, French Assembly National

As I remarked at the start of this post, I believe we’ve lit the fuse of something important to the future development and success of a fair and competitive cloud market. I have already had many comments and expressions of support form across the industry. And I’d love to hear from anyone interested in taking this initiative further. Further events are planned in Italy, Spain, Denmark and the Netherlands in the coming weeks. Please get in touch directly or use the ‘get Involved’ pages on www.fairsoftware.cloud to find out more.

IT business user and provider associations jointly call for consideration of The Principles as Gatekeeper obligations under DMA

Paris, 13^th April 2021. Today, under the high patronage of Cédric O, French Secretary of State for Digital Transition and Electronic Communications, Cigref an association of major French companies and public administrations representing the users of digital technology, launches Ten Principles of Fair Software Licensing for Cloud Customers amidst mounting pressure from European businesses to tackle the unfair practices of certain software companies. The Principles, developed with the support of CISPE, the voice of Cloud Infrastructure Service Providers in Europe, address practices which both associations see harming the digital transformation of organisations of all sizes as they move to the cloud.   

Software plays a critical role in almost every business. Software licenses determine exactly how and where software can be used, and the prices businesses pay. Alarmingly, over the past decades some software providers have leveraged their significant market position to use licenses to restrict choice and impose unjustified technical, contractual or financial constraints on business software users.

Both Cigref and CISPE believe the proposed Digital Markets Act (DMA) presents an opportunity to include some software publishers in the definition of gatekeeper and to create obligations that curb unfair licensing practices. Today these unfair license terms are being used to restrict customer choice, reduce new customer benefits, and limit opportunities for small and larger businesses to grow and innovate. European businesses who suffer from these anticompetitive practices are also likely to pass on increased costs to consumers. Adding fair software licensing to the obligations of gatekeepers could quickly create a more open and competitive digital market in Europe.

“Cigref members describe how unfair software licensing terms have a chilling effect on their opportunities, growth and agility,” commented Philippe Rouaud, CIO of France Télévisions, Board Member and President of Cigref Supplier Relationships Club. “As businesses capitalise on the advantages of the cloud it is vital that the bad practices of some legacy or more recent software companies are not allowed to constrain their choice of cloud. The adoption of these principles is vital for all businesses to derive maximum benefit from the digital revolution and to ensure the success of Europe’s digital economy.”

“Due to the dependency of our economy on software gatekeepers in the cloud market, Europeans must restore control by defining the rules that apply and by ensuring these rules they are fair, equitable and non-discriminatory,” said Mireille Clapot, member of the French Parliament and President of the French Higher Commission for Digital and Postal Services.

Stephanie Yon-Courtin, Member of the European Parliament, commented; “The digital transformation of European businesses through the adoption of cloud technology is a defining goal of Europe’s Digital Decade. It is great to see users and providers coming together to identify issues that may hinder this revolution and find ways to address them together. It is crucial that the right conditions are set to ensure the European recovery benefits from the adoption of cloud technology.”

About The Principles

As an increasing number of businesses, from start-ups to large institutions, move to the cloud it is essential that access to software, digital services and infrastructures is unrestricted and competitive. The cloud is the foundation for tomorrow’s industrial innovations, from quantum computing to 6G, AI to virtual reality. But many are finding that unfair license terms are damaging their ability to freely choose the right cloud solution for their needs. The prominence of some players in key software markets makes it virtually impossible to negotiate fair licenses and many organizations report that they are afraid to take on companies with so much market power. SMEs are especially blighted.

“European companies and administrations are at an inflection-point for cloud adoption and the digital strategies that will deliver a more sustainable, and prosperous economy for all. It is imperative that users are not locked by commercial or technical practices of providers that would be detrimental to the ability to evolve systems, use data, innovate and would ultimately harm the competitiveness of our businesses. Policy makers and stakeholders face a unique opportunity to set the digital economy in Europe on the right course,” added Bernard Duverneuil, CDIO of ELIOR and Chairman of Cigref.

Commenting on behalf of CISPE, Alban Schmutz, Chairman, added; “We have an historic opportunity to ensure that the proposed Digital Market Act addresses the unfair practices of certain legacy software providers and that it promotes a fair and competitive cloud market for all. The Principles are an important building block for software licensing rules that work for customers and consumers in the digital economy.”

The Ten Principles of Fair Software Licensing for Cloud Customers establish a set of voluntary obligations that support Europe’s digital transformation and promote a fair and competitive market for cloud-based services in Europe.

The full list of Principles can be found here: www.fairsoftware.cloud.  

All parties, business users, software developers, vendors and service providers wherever they operate, are encouraged to adopt and apply The Principles as the foundation of fair licensing suitable for the cloud. The European Commission and Member States are invited to consider The Principles to develop obligations for gatekeepers under the terms of the proposed DMA or other regulations.

About Cigref

Cigref is an independent association with no commercial activity, created in 1970, which accompanies its 150 members, large French companies and public administrations using digital solutions and services, in all their reflections on their collective digital issues. Our association works for the benefit of its members to promote a sustainable, responsible and trusting digital. Learn more: www.cigref.fr  

About CISPE

CISPE is an association of cloud infrastructure service providers in Europe. CISPE has 34 members with global headquarters in 14 EU Member States. CISPE has developed the first GDPR code of conduct which encourages the storage and processing of personal data exclusively in Europe. Since 2017, with EuroCIO and then with CIGREF, CISPE has co-chaired the working group developing industry Codes of Conducts which facilitate and enable data portability. This was established by the European Commission within the framework of EU Regulations on the Free Flow of non-personal Data. In addition, CISPE is among the 22 founding members of the Gaia-X initiative and the convener of the Climate Neutral Data Centre Pact.

Alban Schmultz, Chairman of CISPE, explains how cooperation led to the Principles.

CISPE and CIGREF have collaborated on several initiatives previously, now they’ve worked together to formulate ten principles for fair software licensing.

Continue reading “Industry collaboration delivers Principles for Fair Software Licensing”