Microsoft and Cloud Infrastructure Service Providers in Europe (CISPE) have made a commercial agreement that the two say will help "reform licensing terms" for Microsoft software on CISPE member cloud infrastructure.

The agreement comes after it was decided that the previously required solution being developed by Microsoft repeatedly failed to meet the terms of the settlement with CISPE to end an antitrust complaint, which argued the company's contracts were harming the European cloud computing market.

In July 2024, Microsoft settled with CISPE, in an agreement which required the company to pay €20 million ($21.7m) and develop a product - Azure Local - that would enable CISPE's members to run Microsoft software on their platforms at equivalent prices to Microsoft's.

However, in May 2025, "both Microsoft and CISPE have now agreed that Azure Local will not deliver the full set of features outlined in the agreement" and started looking for an alternative solution.

Earlier this month, The Register revealed that Microsoft was seeking a financial solution instead of trying to develop a new product, though at the time CISPE declined to comment on the details of the proposal.

With the two now in agreement, CISPE has shared the terms of the deal.

Microsoft will now enable qualified members to offer Microsoft software to their customers on a pay-as-you-go basis via the CSP-Hoster (CSP-H) program, which it says will have "pricing conditions more comparable to those of Microsoft’s own cloud platform, Azure."

In addition, Microsoft 365 Local will be deployable on European cloud infrastructure to provide additional sovereignty, and CISPE members will be able to host Microsoft workloads without sharing customer details with Microsoft.

The offering is available to current CISPE members and eligible European cloud providers who join CISPE in the coming months, though certain "Listed Providers," including hyperscalers, are not included.

“The agreement we reached with Microsoft marks a significant breakthrough in our long-standing efforts to ensure a level playing field,” said Francisco Mingorance, secretary general of CISPE. “For enterprise customers, the new programs directly address previous concerns of CISPE members and empowers European enterprises to choose among a wide range of cloud solutions that meet their sovereignty, compliance, and economic needs.”

Lars Johnson, GM of business planning at Microsoft, told DCD via email: “We remain steadfast in our commitment to empower our partners and customers with greater choice and control over their data. By working closely with CISPE and our European partner community, we strive to innovate our products, business models, and strengthen our opportunities together.”

While CISPE is satisfied with the terms of this deal, a positive response has not been universal.

Commenting on the agreement, Ryan Triplette, executive director of the Coalition for Fair Software Licensing, said: “Every stalling tactic has just bought Microsoft more time to lock in customers with restrictive and anticompetitive licensing practices. This is more smoke and mirrors from Microsoft: offer weak concessions in an attempt to avoid regulatory scrutiny and disingenuously pretend these actions promote European competition. Meanwhile, Microsoft continues to line its pockets at the expense of customer choice around the world.”

Similarly, Nicky Stewart, senior advisor to the Open Cloud Coalition, responded: “This bilateral deal between Microsoft and a subset of European providers leaves the vast majority of UK and EU customers facing the same high costs and restrictions. It does nothing to fix the underlying issue: Microsoft’s licensing practices that distort competition. Opaque side deals cannot deliver a level playing field. Only market-wide antitrust remedies will deliver real choice and fair pricing.”