Many companies using Microsoft products to deliver services to their customers are familiar with the “commercial hosting” prohibition included in most Microsoft license agreements:
You may not host the products for commercial hosting services.
Most CIOs reading that prohibition also are familiar with the feeling of deep confusion that can arise when they notice that Microsoft has utterly failed to include any definitions or guidance in its license agreements regarding what “host” or “commercial hosting services” means. That confusion can turn to concern and even worry when you realize that the definition of those terms often is a multi-million dollar question implicating a company’s core IT infrastructure. For many companies, it represents a stark dividing line between being able to do business under established architectures and needing to re-build those architectures or even to reassess the viability of the company as a going concern.
Fortunately, Microsoft has provided some guidance outside the four corners of the license agreements in the form of a “SPLA Qualifications Road Map,” the current version of which is available here. Unfortunately, that road map sometimes raises as many questions as it answers. For many service providers, the crucial step in the Road Map is question 5: “Is the third party using the software application as a way to acquire goods or services from the licensee?” The Road Map provides some guidance on the second page, but given the vast and ever-changing array of services that can be delivered to end users over the Internet, those examples often are inadequate.
Like a true lawyer, then, I have to answer the title of this entry by saying: “It depends.” It depends on the nature of your end users, the nature of your relationship with those end users, the Microsoft software used to deliver services to those end users, how the end users access your services, what those services are, and how those services are related to your business operations overall, among other things. Furthermore, many companies will find that some of their systems may qualify as “commercial hosting services” while others may not. Under those circumstances, it is necessary to determine whether it is possible to keep those systems separate for licensing purposes or whether it is necessary to license the entire estate under one of Microsoft’s “commercial hosting” license frameworks (SPLA or Self-Hosted Applications under Software Assurance).
The best course of action in these cases is to involve legal counsel early in the process of deciding whether and how to license Microsoft software for use in customer-facing environments.