Microsoft has reached a settlement with the Cloud Infrastructure Service Providers in Europe (CISPE) to resolve an antitrust complaint over its cloud computing licensing practices.

The agreement, worth approximately €20 million, averts a formal investigation by the European Commission and potential hefty fines for the tech giant.

CISPE, whose members include Amazon and several smaller European cloud providers, had accused Microsoft of imposing unfair contractual terms that harmed Europe's cloud computing ecosystem. Under the new deal, Microsoft will develop an enhanced version of Azure Stack HCI for European cloud providers, allowing them to offer Microsoft applications and services on their local cloud infrastructures.

Brad Smith, Microsoft's president, stated: "After working with CISPE and its European members for more than a year, I am pleased that we've not only resolved their concerns of the past, but also worked together to define a path forward that brings even more competition to the cloud computing market in Europe and beyond."

Key features of the agreement include: A nine-month deadline for Microsoft to deliver the promised product; creation of a European Cloud Observatory to monitor the agreement's implementation; and reimbursement of CISPE's litigation and campaign costs.

Francisco Mingorance, secretary general of CISPE, called the settlement "a significant victory for European cloud providers", adding that it would "provide a level playing field for European cloud infrastructure service providers and their customers".

However, the deal has faced criticism from some quarters. Amazon Web Services (AWS), a CISPE member excluded from the negotiations, expressed dissatisfaction with the limited scope of the agreement. An AWS spokesperson stated: "We continue to stand with the growing number of customers, providers, and regulators globally who are calling on Microsoft to end its discriminatory practices for all customers."

The settlement does not include AWS, Google Cloud Platform, or AliCloud, prompting concerns about its broader impact on the cloud computing market. Google Cloud's head, Amit Zavery, said: "We are exploring our options to continue to fight against Microsoft's anti-competitive licensing in order to promote choice, innovation, and the growth of the digital economy in Europe."

As part of the agreement, CISPE will withdraw its complaint to the European Commission and refrain from initiating or supporting similar complaints elsewhere. However, if Microsoft fails to fulfil its obligations within the nine-month timeframe, CISPE reserves the right to refile its complaint.

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