Biggest Microsoft licensing changes in years

03 October 2022
6 minute read

Biggest Microsoft licensing changes in years

03 October 2022
6 minute read

They’ve been teased for almost 5 months and they’re finally here, Microsoft’s changes to cloud and virtualisation licensing for Windows Server, Windows 11, and desktop applications. These are the biggest Microsoft licensing changes in years… and they don’t disappoint. Well, not unless you’re an Amazon AWS, Google, or Alibaba customer at least!

Outsourcing Software Management clause

There have been 3 additions to the “Universal License Terms for all Software” in the Microsoft Product Terms under this clause:

Flexible Virtualization Benefit

Customers with subscription licenses or Licenses with active Software Assurance (including CALs) may use licensed copies of the software on devices, including shared Servers, that are under the day-to-day management and control of Authorized Outsourcers.”

This is similar to the existing “License Mobility through Software Assurance” benefit but doesn’t have the requirement to use an “Authorized Mobility Partner”; you can instead use any “Authorized Outsourcer” partner which is any partner that isn’t a Listed Provider (Azure/Amazon AWS/Google Cloud/Alibaba).

CSP Hosters

Customers with subscription licenses or Licenses with active Software Assurance (including CALs) may access their licensed copies of software that is provided by a Cloud Solution Provider-Hoster and installed on that partner’s devices.”

Dedicated device outsourcing

Customers may use licensed copies of the software on devices that are under the day-to-day management and control of Authorized Outsourcers, provided all such devices are and remain fully dedicated to Customer’s use.”

These apply to all “software” products (that is things that aren’t Online Services) and individual products may have their own specific terms on top.

Windows Server – License individual VMs

License Windows Server virtual machines individually rather than based on underlying physical hardware – rules are:

  • Minimum of 8 core licenses per VM
  • Minimum of 16 core licenses per customer
  • Licenses must have active SA or be active subscriptions – including CALs
  • Licenses can be re-assigned with the same server farm as often as needed

That last point means that, effectively, License Mobility within Server Farms has been enabled for Windows Server- both in outsourcers environments and your own on-premises environment – and so changes your licensing requirements within virtualized environments.

Windows 11

Windows 11 Enterprise/Education/VDA customers with per-user subscription licenses can install Windows 10 Creators Update or later in an Azure VM or a server that meets the requirements in the “Outsourcing Software Management” clause. The Qualified Multi-Tenant Hoster (QMTH) requirement has been removed from this section as this hosting can now be done with the less restrictive “Authorised Outsourcers”.

This new language is present for volume licensing and also the MCA (CSP) which seems to say that CSP now allows local virtualization – previously only available with volume licensing.

Microsoft 365

Windows 11

The use rights for Windows as part of Microsoft 365 have been modified. The previous language was:

rights to access and use remote virtualized instances of Windows only apply to Licensed Users that are the Primary User of a device licensed with a Qualifying Operating System.”

While it now says:

Licensed Users may only run Windows Enterprise locally on devices with a Qualifying Operating System.”

To quote Microsoft:

Essentially, when licensed as part of Microsoft 365, the requirement to use VDA rights for remote access from desktops without Qualifying Operating Systems no longer applies”.

Microsoft 365 F3

Again, the restrictions on access to virtual instances have been loosened. Previously the Product Terms stated:

rights to access and use virtualized instances of Windows only apply to Licensed Users of a shared device with a Qualifying Operating System

But that clause has now been removed.

Microsoft 365 Apps

There are no clear changes in the Product Terms regarding Microsoft 365 Apps (the locally installable Office suite) but the licensing brief also released this month states:

With the introduction of the Flexible Virtualization Benefit, customers’ options for using Microsoft 365 Apps or Windows 10/11 outside their own data centers are expanded to include any Authorized Outsourcer’s shared servers


Customers may now deploy M365 Apps software on any Authorized Outsourcers’ servers (shared or dedicated) for access by users or from desktops allocated the corresponding M365 Apps licenses

However, this isn’t clear from the current terms so it’s best to wait for further clarity from Microsoft, as license briefs are subordinate to the terms of your agreement and the Product Terms.

Desktop Applications

The word “dedicated” has been removed from the various hosting related clauses in the Product Terms so the section now states:

Remote use of the software running on a Server is permitted for any user from a Licensed Device” rather than on “a dedicated server”. This applies to Office, Project, and Visio.

What does it all mean?

These changes mean that your choice of eligible cloud hosting partners has dramatically increased – now it is only the Listed Providers (Azure/Amazon AWS/Google Cloud/Alibaba) you cannot use for most things. It’s a good thing for customers who are using other cloud hosting providers for other things already and/or those who are yet to make a move in this direction. If this is you, take stock and see what these updates might mean for your planned (or even shelved) projects.

However, given the popularity of the Listed Providers with customer organisations – Amazon AWS in particular – will these changes result in organisations moving away from the Listed Providers and instead using smaller cloud hosting suppliers…or, instead, will the reality be that not much really changes for most customers?

Finally, this is all new so I will continue to review and research and will make any updates/corrections as needed.

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