What you need to know
- Microsoft President Brad Smith recently discussed how the company's licensing practices affected other companies.
- Microsoft offers discounts to organizations that run certain programs on Azure, which has drawn criticism from competitors and regulators.
- Smith admitted that there have been "unintended consequences" as a result of its strategy.
Part of Microsoft's licensing strategy involves bundling services together. In some instances, companies receive a discount when using several Microsoft products in conjunction. In other cases, organizations have to pay a premium to use Microsoft services with cloud platforms other than Azure, such as AWS or Google Cloud. The bundling tactics have come under fire in the past from the EU and UK. Communication rival Slack has also spoken up about Microsoft's bundling.
The crux of these arguments is that Microsoft leverages its market dominance and bundling capabilities in certain spaces to create a non-competitive environment.
Microsoft's president addressed some of the concerns in an interview with Bloomberg. "There definitely are some valid concerns. It's very important for us to learn more and then make some changes."
Smith also admitted that there have been "unintended consequences" that came as a result of its business strategy. He added that Microsoft "should be especially sensitive to the unintended impact on European cloud providers. [Microsoft is] very interested in connecting directly with them and really listening to and understanding better what their concerns are."
The Microsoft president also defended the company's practices to Bloomberg, noting that Google and Amazon could offer similar discounts to respective customers. It's worth noting that the dominance of Microsoft Office is a key factor in this situation. Google offering a discount on its competing products would likely not hold the same weight as Microsoft giving customers a discount for using Office and Azure.
