UK software reseller slams Microsoft for seeking secret licence switch from clients

• Tech giant is offering discounts to organisations to relinquish licences, claimant alleges
• Tech giant blocked resale of perpetual licences to NHS and other government bodies, ValueLicensing claims
• Microsoft prevented resale of perpetual licences in billion-dollar market in the UK and EEA, claimant says

Microsoft has allegedly offered clients such as the Crown Commercial Service discounts and incentives to relinquish pre-owned perpetual licences when moving to other Microsoft services, as well as signing non-disclosure agreements to keep the deals private, the chief executive of a company suing the tech giant in an abuse of dominance claim has told PaRR.

ValueLicensing sells second-hand software licences, which includes Microsoft products, by transferring licenses to other organisations for use. According to ValueLicensing’s official website, the company has supplied licences to the Crown Commercial Service, NHS Shared Business Services and various county councils, as well as purchasing unused licences from companies going through insolvency. The company operates across the EEA, with clients including DHL in Germany and the Czech Republic and Orange in France.

The company filed a GBP 270m damages claim against Microsoft at the High Court earlier this month, claiming that the tech giant abused its dominant position by imposing contractual clauses to restrict the resale of perpetual licences.

The sale of used perpetual licenses was overhauled by the European Court of Justice (ECJ) in its landmark UsedSoft decision in 2012, with the court ruling that the owner of a copyright in software cannot prevent a perpetual licensee from selling their ‘used’ licence.

Speaking to PaRR, ValueLicensing CEO Jonathan Horley said that Microsoft’s crackdown on reselling perpetual licences came as the tech giant is now moving users to subscription licensing and its Azure cloud computing services. “The move to Office 365 [a line of subscription services offered by Microsoft] has increased the pace at which organisations have moved from perpetual licences to subscription,” he said.

In theory, he said that should have meant that more perpetual licenses should have come onto the market, but Horley claimed he realised in 2020 that his company’s ability to purchase licences was being stymied. This affected ValueLicensing’s ability to purchase adequate licences to supply to the National Health Services (NHS), among other clients in the public sector, he said.

In a letter to the Crown Commercial Service seen by PaRR, lawyers for ValueLicensing stated that terms in agreements between the CCS and Microsoft, set to be renewed this month, included provisions stipulating that government departments, local authorities and police forces must relinquish, retain or otherwise refrain from selling Microsoft’s perpetual licensing, in exchange for access to discounted/incentivised Microsoft subscription licences and/or Azure services.

"Microsoft is unable to comment on ongoing legal matters,” a Microsoft spokesperson told PaRR.