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AWS Exec Calls Microsoft Licensing Tactics ‘Anti-Competitive’

Wade Tyler Millward

“This is not fairness in licensing and is not what customers want,” Matt Garman, AWS’ senior vice president of sales and marketing, wrote on LinkedIn.

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An Amazon Web Services executive took shots at Microsoft licensing policies on Microsoft-owned LinkedIn this week, saying that Microsoft’s “recent licensing rhetoric” is “a troubling admission” of anti-competitive tactics.

Matt Garman, AWS’ senior vice president of sales and marketing, wrote on LinkedIn that Microsoft’s “recent licensing rhetoric” is “a troubling admission of the same anti-competitive tactics that many companies have been raising with them for years, but went unheeded until they were put before the European Commission.”

Garman also published a link to an opinion article published earlier this month in The Hill by University of California, Berkeley, professor Steve Weber. The article calls for more regulation around the bundling of cloud applications and cloud platforms.

“MSFT’s answer is not to do what’s right for customers and fix their policy so all customers can run MSFT’s software on the cloud provider they choose; but rather, under the pretext of supporting European technology needs, MSFT proposes to select cloud providers about whom it is less competitively concerned and allow MSFT software to run only on those providers,” Garman wrote.

[RELATED: MICROSOFT COMMERCIAL SALES CHIEF JUDSON ALTHOFF SLAMS AMAZON FOR COMPETING WITH ITS CLOUD CUSTOMERS]

He continued: “This is not fairness in licensing and is not what customers want. We continue to hear from customers around the world that MSFT’s discriminatory licensing practices are costing them millions of dollars and the freedom to work with whom they wish.”

CRN has reached out to Microsoft and AWS for comment.

Justin Stenger, Microsoft’s senior commercial executive for independent software vendors and gaming, defended his company in comments on Garman’s post.

“How many cloud providers does AWS allow to run AWS software?” Stenger asked. “What Amazon IP does Amazon allow customers to run in the Microsoft Cloud?”

Comments From Inspire

Multiple Microsoft executives this week during the company’s annual Inspire partner conference appeared to justify Microsoft packaging policies by saying the tech giant takes a “best of suite” approach to products.

Judson Althoff, executive vice president and chief commercial officer at Microsoft, said that customers putting together a patchwork of software applications won’t work in a poor economy.

“In the past, they (customers) have had the luxury of being able to select best-of-breed and wire it together,” he said during Inspire. “That’s a luxury that frankly is not going to be afforded in today’s economy and in today‘s world. So we have to help them with the best of suite approach – consolidating and enabling a future that’s integrated and you can help deliver that across every facet of the Microsoft Cloud.”

Although Microsoft CEO Satya Nadella didn’t mention AWS by name, he appeared to justify using Microsoft products together in the name of saving on cost during his own Inspire keynote.

“Across our offerings, we offer the best value at every stage of the cloud migration,” he said. “To just share two examples, it’s up to 80 percent less expensive to run Windows Server VMs (virtual machines) on Azure and SQL Server VMs on Azure than it is with our main competitor.”

CRN has reached out to Microsoft about whether the “main competitor” mentioned is AWS. But cloud industry watchers widely consider AWS and Microsoft the top companies in cloud, followed by Google Cloud.

He also said that using the Microsoft 365 suite of products can save customers “more than 60 percent compared to a patchwork of competitive solutions” and that the Power Platform suite of business process automation and productivity applications saves customers “80 percent or more compared to major competitors.”

Microsoft also used the Inspire event to announce a collaboration between Microsoft and IT vendor rival Oracle around enabling Oracle database offerings on Microsoft’s Azure cloud.

Partners Weigh In

Jeff Valentine, president and chief operating officer of West Henrietta, N.Y.-based AWS partner Innovative Solutions, told CRN in an interview that, in his view, Microsoft charges an unregulated tax to run its software in someone else’s cloud.

Innovative specializes in helping Microsoft users add AWS offerings to their IT environment or switching to AWS altogether. But if a customer wants to add an AWS cloud offering while using Microsoft productivity applications, for example, the customer may pay more.

“It’s putting a huge dent in small business pockets because those are the ones that are most affected,” he said. ”The small businesses that have to pay more to run their software on AWS because it just so happens to be a Microsoft license – there is something wrong there and nobody’s doing anything about it.”

Phil Walker, CEO of Manhattan Beach, Calif.-based Microsoft partner Network Solutions Provider – a member of CRN’s 2022 Managed Service Provider 500 – told CRN in an interview that he has sold customers on multi-vendor IT environments that include Microsoft, despite the accusations against the tech giant’s pricing policies.

Walker wants to see the tech giants focus less on market share fights and more on how to invest in the channel, he said. For his business, customers have focused more on managed desktop services and development operations (DevOps) over other areas of cloud computing with thinner margins or an easier way for customers to go direct with vendors.

“They make changes based on customer information, not what’s best for the channel or channel enablement,” he said.

Continued Sniping

This isn’t the first squabble on LinkedIn between Redmond, Wash.-based Microsoft and Seattle-based AWS.

Microsoft’s Althoff posted a link on LinkedIn in February to an article about the Amazon Care telehealth service rolling out nationwide and brought up repeated criticism of how Amazon treats partners.

“Trust is a top priority for our customers,” Althoff wrote on LinkedIn, a social media network focused on professionals and owned by Microsoft. “In industries like healthcare, financial services, and retail, they need to be able to trust that their cloud provider won’t partner with them one day and compete with them the next. At Microsoft, it means something that we are, and have always been, an enterprise technology company.”

At the time, Ethan Simmons, managing partner at Norwood, Mass.-based AWS partner Pinnacle Technology Partners, told CRN in an interview that both companies have their strengths, with AWS’ life science applications services bringing PTP plenty of business.

Ultimately, customers are increasingly seeking multi-cloud environments, Simmons said. He wants to see Microsoft and AWS do more partnering and less sniping, given how many businesses still have to move workloads to the cloud – similar to Walker’s points.

“Instead of bashing the competition, customers would appreciate more integration,” Simmons said.

The Opinion Article

In Weber’s opinion article in The Hill, he calls cloud computing “the single most important development in the digital economy over the last decade” for reducing startup innovation costs, allowing rapid changes in computing capacity and improving cybersecurity.

He said that there are some advantages in pricing and performance when cloud vendors package together computing infrastructure with software applications and security, “but this is precisely why we have to be extra vigilant about the business models and licensing practices of the major cloud service providers.”

Microsoft’s plans to relax licensing restrictions for smaller cloud providers in Europe “isn’t nearly enough,” Weber said.

“As long as Google Cloud and Amazon AWS customers are still disadvantaged by Microsoft’s enterprise software pricing scheme, most European customers will continue to have to absorb higher prices for some important enterprise applications if they choose not to ‘switch’ to a bundle that lives in Azure,” he said.

Weber said that Microsoft is continuing the practices that brought it antitrust scrutiny from the U.S. government in the 1990s and that recently the U.S. has turned its attention to the possibly anti-competitive nature of Apple’s App Store, Google’s search engine and search ad products and Amazon’s private-label items sold on its e-commerce platform.

“These are important developments in competition policy, but they are also aimed at markets that are somewhat mature where the damage has already been done,” Weber said. “Do we really want to wait for the same kind of problem to further impede the development of competition and innovation in the cloud?”

Wade Tyler Millward

Wade Tyler Millward is an associate editor covering cloud computing and the channel partner programs of Microsoft, IBM, Red Hat, Oracle, Salesforce, Citrix and other cloud vendors. He can be reached at wmillward@thechannelcompany.com.

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