Unfair software licensing in the cloud

French competition law expert Prof. Frédéric Jenny investigates the extent to which unfair software licensing conditions of established software companies distort competition in the still young market for cloud infrastructure services in Europe. The study documents practices used by a handful of companies with market power to steer their customers towards their own cloud infrastructure services for enterprise, productivity and database software.

According to the study, these practices will significantly harm competition in the cloud and affect the growth, innovation and viability of European cloud infrastructure providers and their customers. For European consumers, this will lead to less choice and higher prices for cloud services.

"Over the course of several months, I spoke with enterprise software users of all sizes and industries"says Frédéric Jenny. "Some users were afraid of possible reprisals if they spoke out against supposedly unfair practices. Even some major customers of cloud services have realized that they cannot do without the central productivity suites that these same software companies control."

The study, which was sent to Members of the European Parliament, the European Commission and the Council as part of the review, discussion and vote on the Digital Markets Act (DMA), clearly points to a number of practices that incumbent software companies are using to restrict European companies' cloud migration choices. Technical, financial and contractual restrictions are used to keep users in their own cloud infrastructure ecosystem - regardless of whether this is the best solution for the customer.