Microsoft licensing practices hit US businesses, survey says

The Coalition for Fair Software Licensing has published a survey alleging that Microsoft's software licensing practices are harming US businesses, adding to scrutiny of the company's position in cloud software and related markets.

The survey covered 410 software and cloud decision-makers at US companies in sectors including technology, retail, healthcare, financial services, manufacturing and professional services. The coalition said 68% of respondents were the final decision-makers on software and cloud purchases at their companies, while 81% had direct experience running or evaluating Microsoft software on a cloud platform other than Azure.

The research's central claim is that Microsoft's licensing terms affect competition by making it more expensive or less practical for customers to run certain software outside Azure. According to the coalition, 91% of respondents reported at least one concrete harm linked to Microsoft's licensing approach, while 65% said they had experienced three or more.

Cost featured heavily in the responses. More than half of those surveyed, 56%, said they had raised prices for their own customers in response to licensing cost increases. The same share said they had cut other spending, while 33% said they had slowed hiring or reduced headcount.

The results also suggest licensing terms influence cloud choice. The coalition said 83% of respondents agreed that Microsoft's rules meaningfully limit which cloud providers they can realistically consider. Among organisations that had shopped around, 61% said they chose Azure to avoid fees rather than because they considered it the better product.

Another finding suggested workloads were staying outside the public cloud. Nearly two-thirds of respondents said they had kept a workload on their own servers rather than migrating it because of concerns over restrictive licensing terms. The survey also found that, if cost were removed as a factor, eight in 10 respondents would move workloads away from Azure if Microsoft's licensing restrictions were lifted.

AI impact

The study also linked licensing issues to artificial intelligence spending. Among organisations with AI activity, 82% said software licensing had affected which AI platform they could use. More than half of active AI adopters, 52%, said they had already delayed, scaled back or cancelled a project.

That finding places software licensing within a broader argument about how established software vendors can shape the pace and direction of AI deployment. For companies weighing whether to place AI workloads with one cloud provider or another, software entitlements and additional fees can alter a project's economics before technical factors are fully assessed.

The survey also examined audits. It found that 68% of respondents had been audited in the past three years, and 25% had incurred unexpected additional costs. The coalition added that respondents who had evaluated a competitor were 2.2 times more likely to face a costly audit.

Regulatory focus

The publication comes as US regulators continue to examine competition issues in cloud and enterprise software. According to the coalition, 94% of respondents supported allowing businesses to run software they already own on any cloud without additional fees, while 86% said federal regulators should examine licensing practices that limit which cloud providers businesses can use.

The figures are likely to feed an existing policy debate over whether software licensing rules can entrench market positions even when customers are nominally free to choose between cloud platforms. Rival cloud providers and some customer groups have argued for several years that software publishers can use pricing and contractual terms to steer demand.

Microsoft has been at the centre of that debate because of its position in business software, cloud infrastructure and workplace applications. Azure competes directly with other large cloud providers for enterprise workloads, while products such as Windows Server, SQL Server and other Microsoft software remain deeply embedded in many corporate IT estates.

The coalition describes itself as a North America-based initiative whose members include healthcare companies, financial services businesses, and cloud and cybersecurity providers. It argues for what it calls fair software licensing principles aimed at giving customers greater freedom over where they run licensed software.

Ryan Triplette, Executive Director, Coalition for Fair Software Licensing, said: "Microsoft's customers are telling us the system is broken. Businesses are being steered to Azure by financial penalties rather than by merit. They are passing the costs on to their own customers and delaying the AI tools they need to compete. Some are choosing not to migrate to the cloud at all, rather than incur the costs associated with Microsoft's licenses to do so. The closer a decision-maker is to Microsoft's licensing practices, the more urgently they want regulators to step in. Regulators should take note: what happens next matters to every American business, and every consumer paying more because of Microsoft's anticompetitive licensing practices."