From 1 October 2019, Windows licences bought without Software Assurance and Licence Mobility could no longer be deployed on dedicated hosted services from Microsoft's Listed Providers. Who it hit, which products it covered, and why the rule still matters.
Microsoft enacted a cloud licensing change in 2019 that was going to cost some customers a lot of money. It is worth understanding, because the reasoning behind it has shaped every outsourcing rule Microsoft has written since.
As of 1 October 2019, Windows licences acquired without Software Assurance and Licence Mobility rights could no longer be deployed on services offered by “Listed Providers” — the named set of large public cloud providers, which included Amazon Web Services, Google and Alibaba, as well as Microsoft itself.
According to Microsoft:
The emergence of dedicated hosted cloud services has blurred the line between traditional outsourcing and cloud services and has led to the use of on-premises licenses on cloud services. Dedicated hosted cloud services by major public cloud providers typically offer global elastic scale, on-demand provisioning and a pay-as-you-go model, similar to multi-tenant cloud services.
Why did Microsoft do this? The cynical reading at the time was that with Azure growth under pressure, Microsoft was looking to promote benefits such as Azure Hybrid Use Rights to regain a competitive edge over Amazon, Google and Alibaba. Whatever the motive, the effect was unambiguous: the licence you already owned stopped being portable to a competitor’s dedicated hardware.
The change hit organisations with a dedicated hosting arrangement at one of the Listed Providers, running a BYOL — Bring Your Own Licence — model without active Software Assurance.
The impact was not immediate. Existing deployments could continue. But any new instance, and any version upgrade, required the purchase of new licences with active Software Assurance. That is the detail that catches people out: nothing breaks on day one, so nothing gets escalated, and the exposure accumulates quietly until the first upgrade cycle.
The products most likely to be affected are Windows Server, SQL Server, and any applications required alongside them. The definitive list is the one published in Microsoft’s Product Terms — historically the Product Use Rights document — rather than any summary of it, including this one.
The cost impact depends on several factors: whether you are running legacy licences in the dedicated hosting environment, which agreement types you hold (transactional, Enterprise Agreement), and the price level you are entitled to.
The mechanism matters more than the arithmetic. If your deployments are not fully covered by active Software Assurance, the cost lands the moment you upgrade or buy new — because Software Assurance cannot be added retrospectively to licences you already own. There is no catching up after the fact. You either had it, or you buy the licence again.
Treat everything above as a description of a specific change on a specific date, not as the current rule. Microsoft has revised its outsourcing terms more than once since 2019 — most substantially in October 2022, which introduced the Flexible Virtualisation Benefit for customers with Software Assurance or subscription licences deploying with Authorised Outsourcers. Listed Providers remained carved out of that benefit.
The principle the 2019 change established has not moved: your rights on someone else’s dedicated hardware depend on the currency of your Software Assurance and on who is running the hardware. Before you act, read the current edition of the Microsoft Product Terms. Do not act on a licensing blog post from any year, including this one.
Further changes to Microsoft licensing will keep making an already complicated management problem harder. The defence is unglamorous and it does not change: you need to know what you have deployed with hosted and cloud providers, and what licensing you hold to cover it. If you have Software Assurance and can prove it covers the deployments, you are already in control.
If you cannot prove it — or you want to upgrade or deploy new instances in a dedicated environment — you have a compliance and Software Asset Management gap that needs closing before someone else finds it.
Closing it means two things being true at once, which is where most tooling falls down.
You have to see the deployments. CerteroX ITAM inventories across ten discovery methods and six operating system families, with connectors for AWS, Microsoft Azure, VMware, Hyper-V and Citrix XenServer, so hosted and virtualised workloads land in the same schema as everything on your own floor. There is no separate cloud inventory to reconcile against the on-premises one, because there is only one.
You have to hold the entitlement against them. CerteroX SAM covers Windows Server and SQL Server core and processor licensing with cluster and virtualisation awareness, device and user CALs, and external connectors — with Microsoft Licence Statement import to bring in what you have actually bought. Subscription flags with expiry tracking are what turn “we think we have Software Assurance” into a date you can check, and the Effective Licence Position is computed continuously rather than assembled the week the question is asked.
If you are not certain what Microsoft software you have deployed or how it is licensed, that uncertainty is the finding. Talk to us before an upgrade forces the answer.
Other posts covering the same ground.
Microsoft's Outsourcing Software Management clause turns on one definition — the Authorised Outsourcer — and one condition almost everyone gets caught by. Here is what the three sections actually say.
How to assess SAM maturity honestly, and what to do about the gaps once you can see them — whether that means switching on more of the platform, bringing in publisher expertise, or building the in-house team through skills transfer.
Hybrid IT broke the ITAM tools built for the data centre. What unified discovery, software recognition and governance actually have to cover when your assets span on-premises, virtual, cloud and SaaS — and how to test a vendor against it.
Everything argued above is checkable. Name the publisher, the billing account or the platform you would argue with, and the session is built around it — the reasoning attached, not a summary slide.
No gated download at the end of it.