- 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, 25th 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.