Microsoft SPLA changes

June 29, 2023

Microsoft’s Service Provider License Agreement (SPLA) is a widely-used licensing program that allows service providers to offer Microsoft software and services to their customers. However, recent changes introduced by Microsoft have significant implications for providers, potentially impacting their hosting services. In this blog post, we will delve into the key changes made to SPLA, particularly those that took effect on December 1, 2022, and October 1, 2022. We will also discuss the challenges and considerations surrounding Windows Server Bring Your Own License (BYOL) and the end of Data Center Provider (DCP) outsourcing to Listed Providers.

Changes in SPLA on December 1, 2022:
On this date, Microsoft made significant updates to the Service Provider Use Rights (SPUR) document, introducing certain breaking changes. The most notable change was the inclusion of Azure DevOps Server 2022 in the availability list. However, it’s essential to understand the implications of these changes on your Microsoft hosting services.

Clarifications Regarding BYOL in Product Terms:
The SPUR document also brought clarifications related to Bring Your Own License (BYOL) in Product Terms, specifically concerning SQL Server Technology. SQL Server bundled with other Microsoft software, such as Azure DevOps Server, can now be deployed in shared environments, allowing hosting providers to utilize BYOL for the qualifying main product. Additionally, SQL Server Failover nodes can now be deployed on shared hosting servers.

Changes in SPLA on October 1, 2022:
October 1, 2022, witnessed a significant breaking change that affects providers who host their end-client workloads on AWS, GCP, Azure, or Alibaba (Listed Providers) and report Subscriber Access Licenses (SALs) through their own SPLA. Providers now have a three-year transition period until September 30, 2025, during which they must cease “outsourcing licenses” to Listed Providers.

Migration from QMTH to CSP Hoster Program:
Qualified Multitenant Hosting (QMTH) providers now have the option to gradually migrate to the new CSP Hoster program. While the migration is voluntary, it is important to note that Microsoft expanded Microsoft 365 Apps and Windows 11 hosting rights to all hosting service providers. As a result, QMTH’s relevance diminished, and providers may want to explore the new opportunities available through the CSP Hoster program.

Windows Server BYOL Challenges:
One of the significant changes is that all hosting providers, not limited to SPLA, can now allow their end-clients to bring their licenses for Windows Server on multi-tenant hardware, known as Bring Your Own License (BYOL). However, this introduces challenges for providers as they need to ensure end clients possess the required Windows Server volume licenses with active Software Assurance or Windows Server CSP subscription licenses. Adequate Windows Server Client Access Licenses (CALs) are also necessary.
This shift to BYOL creates an economic impact that providers must consider. Previously, providers would license their hosts with Windows Server or Core Infrastructure Suite Datacenter, with a predictable cost per host’s core. However, now that end clients can bring their licenses, providers face the challenge of discounting and recovering costs for virtual machines covered by these licenses. Transitioning to a new infrastructure for Windows Server BYOL may be a solution but could pose feasibility issues for many providers.

End of DCP BYOL to Listed Providers:
The SPLA allows service providers to outsource workloads to Data Center Providers (DCP), which has facilitated collaborations and partnerships between providers, including offloading end-client VMs to hyperscalers like AWS. However, Microsoft has decided to discontinue this practice by October 1, 2025. Providers hosting end-client workloads on Listed Providers and reporting licenses through SPLA will only be able to do so until September 30, 2025.

We can guide you through the complexities of SPLA licensing, help you navigate the changes effectively, and ensure compliance with Microsoft’s licensing requirements. Don’t hesitate to reach out to us for expert assistance in optimizing your software licensing strategy.