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Image: Microsoft’s License Changes for Public Cloud: How Do They Affect You?

Earlier this month, Microsoft announced major changes to the rules for bringing Microsoft licenses to the public cloud, including AWS, Alibaba and Google.

From Microsoft’s blog:

“Beginning Oct. 1, 2019, on-premises licenses purchased without Software Assurance and mobility rights cannot be deployed with dedicated hosted cloud services offered by the following public cloud providers: Microsoft, Alibaba, Amazon (including VMware Cloud on AWS), and Google. They will be referred to as “Listed Providers.”

The biggest “gotcha” in this change is that Software Assurance for Windows Server doesn’t include License Mobility rights. As a result, after Oct. 1, the only way to use Windows Server in AWS, Alibaba or Google is to purchase the Windows license directly from the cloud provider when you buy the instances, virtual machines or hosts.

These changes will apply to Microsoft licenses purchased after Oct. 1 and if you upgrade to a new version released on or after that date. It won’t apply if you’re running licenses purchased before Oct. 1 on dedicated hosts in cloud services until you upgrade to a version of the software released after that date.

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While this change applies to Microsoft’s own Azure cloud as well, Microsoft gets around this limitation through the Azure Hybrid Benefit. This is a special benefit that allows you to bring your on-premise Microsoft licenses to Azure, as long as you have Software Assurance. You can take advantage of Azure Hybrid Benefit for both shared servers (virtual machines) and dedicated hosts. Because Azure Hybrid Benefit isn’t limited to products with License Mobility, you can bring Windows Servers licenses and SQL Server licenses to Azure. The Azure Hybrid Benefit results in significant savings on the price of purchasing those licenses on-demand through Azure.

Summary of new rules for bringing Microsoft licenses to public clouds (as of Oct. 1)

Public Cloud AWS, Alibaba and Google Azure
Shared hosts Dedicated hosts Shared hosts Dedicated hosts
Windows Server without Software Assurance Not allowed Not allowed for licenses purchased after Oct. 1, or for software released after Oct. 1 Not allowed Not allowed for licenses purchased after Oct. 1, or for software released after Oct. 1
Windows Server with Software Assurance Not allowed (this product does not have license mobility rights) Not allowed for licenses purchased after Oct. 1, or for software released after Oct. 1 Allowed via Azure Hybrid Benefit Allowed via Azure Hybrid Benefit
SQL Server without Software Assurance Not allowed Not allowed for licenses purchased after Oct. 1, or for software released after Oct. 1 Not allowed Not allowed for licenses purchased after Oct. 1, or for software released after Oct. 1
SQL Server with Software Assurance Allowed via License Mobility use rights Allowed via License Mobility use rights Allowed via Azure Hybrid Benefit Allowed via Azure Hybrid Benefit
Exchange, SharePoint or Skype for Business Server without Software Assurance Not allowed Not allowed for licenses purchased after Oct. 1, or for software released after Oct. 1 Not allowed Not allowed for licenses purchased after Oct. 1, or for software released after Oct. 1
Exchange, SharePoint or Skype for Business Server with Software Assurance Allowed via License Mobility use rights Allowed via License Mobility use rights Allowed via License Mobility use rights Allowed via License Mobility use rights
Office Professional Plus without Software Assurance Not allowed Not allowed for licenses purchased after Oct. 1, or for software released after Oct. 1 Not allowed Not allowed for licenses purchased after Oct. 1, or for software released after Oct. 1
Office Professional Plus with Software Assurance Not allowed (this product does not have license mobility rights) Not allowed for licenses purchased after Oct. 1, or for software released after Oct. 1 Not allowed (this product does not have license mobility rights) Not allowed for licenses purchased after Oct. 1, or for software released after Oct. 1

This summary is based on information in the Microsoft FAQ:  https://aka.ms/outsourcerights. The information is provided for convenience. You should confirm your license rights with your legal counsel.

What your software asset management team needs to do

It’s essential to understand the implications these changes may have on your Microsoft licenses.

  1. Check if you’re currently using dedicated hosts on AWS, Alibaba or Google
  2. Check if you’re currently bringing Microsoft licenses to those hosts and which software is involved
    1. For BYOSL for SQL Server, Exchange Server, SharePoint Server or Skype for Business Server
      • Exercise your License Mobility rights for those licenses if you have Software Assurance for the licenses
      • Don’t upgrade to a version released after Oct. 1 if you don’t have Software Assurance for the licenses. In order to upgrade, you’ll need to purchase these licenses directly from the cloud provider. You won’t be able to bring licenses you have already purchased
    2. For BYOSL for Windows Server or Office Professional Plus
      1. Don’t upgrade to a version released after Oct. 1. In order to upgrade, you’ll need to purchase these licenses directly from the cloud provider. You won’t be able to bring licenses you have already purchased
  3. For new Windows instances, hosts or VMs created in AWS, Alibaba or Google after Oct. 1, check the rules above
  4. For Azure users, this is also an opportunity to review your use of the Azure Hybrid Benefit to ensure you’re in compliance and that you’re taking advantage of the most savings