According to DCD, the European Cloud Competition Observatory (ECCO) has awarded Microsoft “green” status in its third report, praising the company’s efforts to reform licensing practices after two consecutive “amber” ratings. The upgrade follows Microsoft’s July 10, 2025 agreement with CISPE that enables the association’s 38 members to secure changes to Microsoft terms addressing competition concerns. While Microsoft improves its standing, Broadcom received another “red” rating with ECCO accusing the company of worsening anti-competitive practices, leading CISPE to file for annulment of the Broadcom VMware deal. The Microsoft agreement includes Pay-As-You-Go licensing for Windows Server and SQL Server at Azure-comparable rates and enables deployment of Microsoft 365 on local cloud infrastructure for sovereignty purposes. This development signals a significant shift in the European cloud competition landscape.
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The European Cloud Licensing Battlefield
The CISPE monitoring initiative represents a crucial turning point in how European regulators and industry groups approach cloud competition. Unlike traditional antitrust enforcement that relies solely on regulatory penalties, this approach combines ongoing public monitoring with negotiated settlements. The fact that Microsoft moved from amber to green status within months demonstrates the effectiveness of this model when companies engage in good faith negotiations. However, the exclusion of hyperscalers like Amazon Web Services from CISPE membership reveals the complex dynamics at play, where European cloud providers seek protection from both dominant software vendors and competing cloud infrastructure giants.
Microsoft’s Strategic European Pivot
Microsoft’s successful navigation of these requirements reflects a broader strategic calculation about the European market. The company’s willingness to offer Azure-comparable pricing to European cloud providers represents a significant concession that acknowledges the growing importance of cloud computing sovereignty concerns. What’s particularly noteworthy is the timing – this comes as European governments increasingly mandate that sensitive data remain within EU borders. By accommodating these requirements, Microsoft positions itself as a cooperative partner rather than a dominant force, potentially gaining long-term advantage in a market that’s becoming increasingly wary of U.S. tech dominance.
Broadcom’s Regulatory Confrontation Path
The contrasting situation with Broadcom highlights the risks of ignoring European regulatory concerns. Where Microsoft pursued a settlement strategy, Broadcom appears to be doubling down on practices that European regulators find problematic. The decision by CISPE to challenge the already-approved VMware acquisition is unprecedented and signals that European industry groups are willing to use every available legal tool. This creates significant uncertainty for Broadcom’s European customers and partners, who now face the prospect of ongoing legal battles and potential forced divestitures years after the acquisition closed.
The Unresolved Competition Issues
While Microsoft’s progress is notable, several critical competition issues remain unaddressed. The ECCO report explicitly notes that the agreement doesn’t cover bundling strategies or the integration of AI capabilities with software – two areas where Microsoft has significant market power. As AI becomes increasingly central to cloud services, this omission could become more significant. Additionally, the exclusion of hyperscalers from the benefits means that smaller European providers still face competition from AWS and Google Cloud that operates under different licensing terms, creating an uneven playing field that could undermine the intended competitive benefits.
The Future of European Cloud Competition
This development represents just one chapter in the ongoing evolution of Europe’s cloud market. The divergent paths of Microsoft and Broadcom suggest that software providers face a clear choice: engage constructively with European competition concerns or face escalating regulatory challenges. For European businesses and cloud providers, the Microsoft agreement provides immediate relief but doesn’t fundamentally alter the market dynamics that concentrate power with a few dominant U.S. companies. The true test will be whether these licensing changes actually stimulate meaningful competition and innovation in the European cloud ecosystem or simply create slightly better terms within an unchanged market structure.
