Microsoft bows to the backlash and will not start charging its sales partners to use its software
- Ahead of Microsoft's massive partner conference next week, partners were protesting a new policy that would charge them for using the tech titan's software to run their own businesses.
- A Microsoft exec had told Business Insider that the company couldn't afford to supply their partners with software anymore in a cloud-first world and that they'd need to pay up "just like every other customer."
- But as the controversy and protests grew, with over 6,000 people signing an internet petition, Microsoft bowed to the pressure and reversed course.
- The company will not start charging its partners to use its software, a vice president said in a blog post.
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After some 6,000 people signed an Internet petition in a matter of day angrily demanding that Microsoft not take away a valuable perk - resellers' rights to use Microsoft software - Microsoft has bowed to the pressure and reversed course.
On Friday, the day before its annual partners conference, where thousands of partners will descend on Las Vegas to learn how they can make money by helping the tech giant sell its wares, Microsoft cancelled the policy.
The company had been planning on doing away with the perk that was included to those that pay an annual subscription to be part of its official sales channel. As of July 1, 2020, the tech titan was going to stop allowing its partners to use Microsoft software internally to run their own business for free as part of their subscription.
"In announcing these changes it's clear Microsoft is going to war with its partners," the petition reads, in part. The author of the petition calculated that even a small partner with 15 people that uses Microsoft's Dynamics to manage its customer interactions would suddenly be on the hook to pay Microsoft $2400 a month. Under the old system, these partners got free software as part of their annual subscriptions. Those subscriptions ranged from $475 a year for small partners to $4,730 a year for its gold-level partners.
Microsoft had for decades allowed business partners to use its software internally, and even provided them with technical support, because it made business sense. They wanted partners to know and customize the Microsoft software that they sold, just like they would do for Microsoft customers. In the tech world, this is called eating your own dog food.
But in light of the uproar, channel VP Gavriella Schuster announced in a blog on Friday that Microsoft is simply cancelling the policy. Partners will not be required to pay for their software use - nor will they be pushed into obtaining specialized new certifications to help Microsoft sell its cloud.
"We listened to you, and we have acted," she wrote. "Our decision to rescind these changes required a thorough review, and a key determining factor was the connection and trust we have with you, our partners - a valuable asset we do not take for granted."
A cynical analysis of Microsoft's attempt to charge its sales partners would go like this: Microsoft started viewing the tens of thousands of companies that run sells its wares as an untapped source of revenue, rather than as an extension of the company.
And Schuster said about as much in an interview with Business Insider.
"We have essentially let them run their environment on Microsoft for free. Now, just like every other customer, they'll have to pay for the services that they use," she told Business Insider's Rosalie Chan.
The move was a bit more complicated than that. Microsoft also, wants its partners to stop using on-premise software and use its cloud instead, as part of a broader push at the company towards cloud services like Azure or the Office 365 suite.
And Schuster pointed out that if it were to offer free cloud services, the way it offers free software, this creates an ongoing expense for the tech giant because Microsoft has to pay for the servers, storage and data center.
"We can't afford to run every single partner's organization for free anymore, because it's not free," she said.
Schuster characterized uproar over the new policy like this: "You have to start paying for something we've been giving for free for a long time, It's like when your kids turn 20, and you tell them they have to pay rent."
But given the backlash, which was threatening to overshadow Microsoft's upcoming announcements at its partner conference next week, Microsoft was wise to rethink the policy.
As for how the about-face will impact Microsoft's bottom line, think of this: if Microsoft can afford to offer 5 gigabytes of cloud storage to millions of consumers in the world for free, and 100 gigabytes of storage for just $2/month, it seems likely that the company won't be bankrupt by continuing a perk as part of their annual reseller subscription, just as it has for decades.
Are you a Microsoft insider with insight to share? We want to hear it. jbort@businessinsider.com. DM on Twitter @Julie188 or contact via Signal.