The Ghosts of Software Licensing Past, Present and Future

The last year has seen significant developments on the software licensing front, both in the United States and across the globe. The Coalition for Fair Software Licensing has actively participated in those developments; consistently voicing its concerns about the anticompetitive and restrictive software licensing practices of legacy software providers and advocating for the adoption of the Coalition’s 9 Principles of Fair Software Licensing to spur innovation, choice, and growth in the digital economy.

As we settle into the new year and prepare for a new Administration in the U.S., it is important to highlight the top moments in software licensing in 2024 to better understand what sits on the horizon in 2025.

The Ghost of Software Licensing Past

• • January 2024
    • The US Government Accountability Office (GAO) released a report highlighting the inefficiencies and cost overruns related to software licensing in the federal government, with more than $100 billion spent annually on IT and cyber-related investments. 
    • Microsoft confirmed that Russian state actors breached their security and monitored email communications by their executives. They also acknowledged that hackers may have gained access to U.S. government communications. 
  • April 2024
    • The Cyber Safety Review Board (CSRB) issued a report related to a 2023 hack by Chinese state actors of Microsoft that exposed communications by high-ranking U.S. officials, including Secretary of Commerce Gina Raimando. The report blamed a “cascade of errors” by Microsoft and outlined “shoddy cybersecurity practices, a lax corporate culture and a lack of sincerity about the company’s knowledge of the targeted breach, which affected multiple U.S. agencies that deal with China” according to the Associated Press. These issues led to headlines like “The US Government Has a Microsoft Problem” from Wired and “Back-to-back hacks put Microsoft on the defensive in DC” from Politico. 
    • Reuters reported that the South Africa Competition Commission (SACC) was set to launch an investigation into Microsoft over its anticompetitive licensing practices. 
  • May 2024
    • La Asociación Española de Startups (AES) filed a complaint to the Spanish National Markets and Competition Commission (CNMC), accusing Microsoft of “anti-competitive practices” and use of its dominance in software to force adoption of cloud services.
    • The Spanish National Markets and Competition Commission (CNMC) shortly thereafter opens a public consultation on cloud services, receiving input from a range of stakeholders – including the Coalition – raising antitrust concerns about Microsoft’s software licensing practices.
  • June 2024
    • The House Homeland Security Committee held a hearing entitled “A Cascade of Security Failures: Assessing Microsoft Corporation’s Cybersecurity Shortfalls and the Implications for Homeland Security.” A Reuters headline stated “US lawmakers grill Microsoft president over China ties, hacks.” 
    • The U.K.’s Competition in Markets Authority (CMA) published its initial findings from a year-long investigation noting that Microsoft has “significant market power” in a range of software products and highlighting the ways in which Microsoft uses its software licensing policies to restrict customer cloud choice. 
    • The European Commission sends Statement of Objections to Microsoft regarding possibly abusive tying practices regarding Teams.

• ProPublica issued a report, featuring exclusive information from a Microsoft whistleblower on the 2023 hack by Russian state actors titled “Microsoft Chose Profit Over Security and Left U.S. Government Vulnerable to Russian Hack, Whistleblower Says”. 

• July 2024
  • The Danish Competition and Consumer Authority launched an investigation into the state of competition in the market for cloud services for businesses and the public sector. 
  • The Cloud Infrastructure Service Providers in Europe (CISPE) and Microsoft agreed to a $22 million settlement in its long-running antitrust complaint against the company. 
• September 2024
  • The Bundeskartellamt or Federal Cartel Office (FCO), Germany’s competition regulatory agency, determined that Microsoft is subject to extended abuse control and that, “In many cases Microsoft assumes a dual role as the company not only sets the framework conditions for third-party product developers, but also competes with them.”
• November 2024 
  • In response to a 2022 letter sent by Senators Peters (D-MI) and Ernst (R-IA), the US Government Accountability Office (GAO) issues another report outlining the impact that restrictive software licensing practices are having on Departments and agencies in the US Government, including cost increases and limitations on the choice of cloud providers.
  • ProPublica released a bombshell report on Microsoft’s relationships with the federal government and efforts to box out competitors. 
  • The Financial Times reported that the US Federal Trade Commission had launched an antitrust investigation into Microsoft’s cloud business. That reporting was confirmed by a variety of U.S. news outlets, including the Associated Press, Bloomberg, CNN and Reuters. 
    • This report came nearly a year and a half after the US Federal Trade Commission’s Request for Information on cloud computing business practices. In its June 2023 submission to the FTC, the CFSL formally requested an investigation into Microsoft’s software licensing practices,  with Executive Director Ryan Triplette stating:
      • “Microsoft has a proven history of leveraging its dominance in one market to gain a foothold and extinguish competition in another. Today the software giant is using that same playbook to exploit customers’ dependence on its desktop operating system, server, and productivity software to force customers to use Azure and other products in the Microsoft ecosystem.”

• • December 2024
    • The UK’s Competition and Markets Authority (CMA) announced that the full report of their ongoing investigation into the supply of public cloud infrastructure in the U.K. will be released in January. 
    • A class-action lawsuit was filed against Microsoft in the U.K. accusing the company of unfairly overcharging customers of rival cloud companies. 
    • The SAMOSA Act passed the US House of Representatives. The bill would improve federal oversight of software acquisition practices and is estimated to save the US Government and taxpayer conservatively $750million annually.. 
    • President-Elect Donald Trump selected Andrew Ferguson to chair the FTC and Gail Slater to lead the DOJ’s antitrust division. Both Ferguson and Slater are seen as critical of anticompetitive practices in the technology space.  
• ProPublica reported that Microsoft’s bundling practices are the focus of the U.S. Federal Trade Commission’s probe. 

The Ghost of Software Licensing Present

As we begin 2025,questions about software licensing practices by legacy providers are at the forefront of technology and competition policy discussion across the globe. Where do things stand right now? 

The U.S. Federal Trade Commission is investigating Microsoft’s anticompetitive practices related to its cloud business. 

CISA and CSRB continue to scrutinize cybersecurity failures that have led to massive security breaches exposing communications by U.S. government officials. 

Elon Musk’s Department of Government Efficiency is looking at opportunities to increase efficiency and cost savings across the federal government. 

States around the U.S. are passing or considering legislation that prohibits software vendors from limiting the hardware it is run on, be it on premises or in the cloud. 

International regulatory agencies – from the U.K. to Spain to Germany to Africa and South America – are investigating anticompetitive practices related to software licensing and cloud business by legacy software providers while legislative bodies are considering remedies to protect customers from higher costs and inefficiencies. 

The Ghost of Software Licensing Future 

2025 will bring significant developments in the ongoing debate and discussion surrounding the impact of restrictive software licensing practices on customer choice and competition in the cloud stack. Momentum has been building for years to hold legacy software providers accountable for the anticompetitive practices that stifle innovation and hurt their own customers. 

Across the globe, regulators and policymakers are taking action. Here’s a few key questions to keep an eye on heading into the new year. 

• Will the U.K.’s Competition and Markets Authority confirm their initial findings that Microsoft uses its significant market position in certain software sectors to restrict cloud choice? 
• How will the US Federal Trade Commission’s investigation into Microsoft’s software licensing practices and cloud business progress under new FTC and DOJ leadership? 
• How will investigations in international jurisdictions like Germany, Spain, and South Africa progress? 
• Will legislatures or agencies in the US or internationally take action to modernize the federal IT infrastructure, increasing efficiency and cost-savings for taxpayers? Will other international jurisdictions facing similar software cost overspend challenges follow suit?
• Will legacy software providers like Microsoft change course in response to legal and regulatory scrutiny or will they continue to leverage their dominance in one market to gain a foothold and extinguish competition in others, negatively impacting their own customers in the process? 

As these questions are answered over the course of 2025, the Coalition for Fair Software Licensing will continue to advocate for the Principles of Fair Software Licensing and provide the foundation needed to spur innovation, choice, and growth in the digital economy.