On August 1, 2019, Microsoft announced major changes to the rules for bringing Microsoft licenses to the public cloud, including AWS, Alibaba and Google.

“Beginning October 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.”

Blog: https://www.microsoft.com/en-us/licensing/news/updated-licensing-rights-for-dedicated-cloud

The biggest “gotcha” in this change is that Software Assurance for Windows Server does not include License Mobility rights. As a result, after October 1, 2019, 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 purchase the instances, virtual machines or hosts.

These changes will apply to Microsoft licenses purchased after October 1, 2019, and if you upgrade to a new version released on or after October 1. The changes won’t apply if you’re running licenses purchased before October 1 on dedicated hosts in cloud services, until you upgrade to a post-October 1 version of the software.

While this change applies to Microsoft’s own Azure cloud as well, Microsoft gets around this limitation through the Azure Hybrid Benefit—a special feature 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 is not 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, 2019)

Public CloudAWS, Alibaba and GoogleAzure
Shared hostsDedicated hostsShared hostsDedicated hosts
Windows Server without Software AssuranceNot allowedNot allowed for licenses purchased after 10/1/19, or for software released after 10/1/19Not allowedNot allowed for licenses purchased after 10/1/19, or for software released after 10/1/19
Windows Server with Software AssuranceNot allowed (this product does not have license mobility rights)Not allowed for licenses purchased after 10/1/19, or for software released after 10/1/19Allowed via Azure Hybrid BenefitAllowed via Azure Hybrid Benefit
SQL Server without Software AssuranceNot allowedNot allowed for licenses purchased after 10/1/19, or for software released after 10/1/19Not allowedNot allowed for licenses purchased after 10/1/19, or for software released after 10/1/19
SQL Server with Software AssuranceAllowed via License Mobility use rightsAllowed via License Mobility use rightsAllowed via Azure Hybrid BenefitAllowed via Azure Hybrid Benefit
Exchange, SharePoint or Skype for Business Server without Software AssuranceNot allowedNot allowed for licenses purchased after 10/1/19, or for software released after 10/1/19Not allowedNot allowed for licenses purchased after 10/1/19, or for software released after 10/1/19
Exchange, SharePoint or Skype for Business Server with Software AssuranceAllowed via License Mobility use rightsAllowed via License Mobility use rightsAllowed via License Mobility use rightsAllowed via License Mobility use rights
Office Professional Plus without Software AssuranceNot allowedNot allowed for licenses purchased after 10/1/19, or for software released after 10/1/19Not allowedNot allowed for licenses purchased after 10/1/19, or for software released after 10/1/19
Office Professional Plus with Software AssuranceNot allowed (this product does not have license mobility rights)Not allowed for licenses purchased after 10/1/19, or for software released after 10/1/19Not allowed (this product does not have license mobility rights)Not allowed for licenses purchased after 10/1/19, or for software released after 10/1/19

This summary is based on information in the Microsoft FAQ https://aka.ms/outsourcerights. This information is provided for convenience, but please confirm your license rights with your own 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:
      1. If you have Software Assurance for the licenses, exercise your License Mobility rights for those licenses
      2. If you don’t have Software Assurance for the licenses, don’t upgrade to a post-Oct 1 version. 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 post-Oct 1 version. 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 October 1,
    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 maximum possible savings

Source: https://www.flexera.com/blog/application-readiness/2019/08/microsofts