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Cloud busting

Assessing the impact of software licensing practices on competition

New research by Savanta supports the basis of EU and national competition authorities’ investigations into the impact of legacy software vendors’ licensing practices that could harm competition in the cloud infrastructure market.

Chris Woolcott Director 01/02/2024

Research conducted by Savanta highlights the challenges that European businesses face in changing their cloud infrastructure providers, often due to restrictive licensing practices or other activities that inhibit market competition. The study comes in the wake of the UK Competition and Markets Authority saying it would examine the impact of software licensing practices on competition in the cloud market, along with the French Competition Authority highlighting the issue in its cloud market study last year. The European Commission and the US Federal Trade Commission are currently considering whether to investigate restrictive software licensing further.

The research surveyed 1,241 IT decision-makers across five countries (UK, France, Germany, Netherlands, Spain), and included both small and medium-sized businesses and large corporations with 250+ employees. Organisations across the public and private sectors were part of the survey sample.

Market growth will be driven by switching to cloud.

Mirroring other studies that suggest the cloud market still has huge potential for future growth, the research found that less than one quarter (22%) of those surveyed by Savanta reported being “fully in the cloud,” with a larger proportion (36%) stating they were equally in the cloud and on-premise.

Market performance of players in the IaaS sector are therefore going to continue to be significantly driven by those moving from on-premise solutions to cloud-based ones. Previous research has highlighted that when taking this decision to migrate legacy footprints onto the public cloud, the freedom to select an infrastructure of choice is called out as key as they look to diversify their cloud strategies and reduce dependencies on a single vendor.

Licensing terms hold back switching

Despite this desire for choice, of those surveyed who have considered switching cloud infrastructure (IaaS) providers, 40% claimed that existing licensing terms prohibit their companies from taking on-premise licences to another vendor, and a further 40% worried about losing discounts – another potential cause of cloud “lock in.”

In fact one of the biggest reasons IaaS customers originally chose their technology providers was because of discounts due to existing software licences (42%).

To continue reading, download the full report.