[Update: Vendors Win] Microsoft Was To End Internal Use Rights For Its Partners Which Meant No Free Usage Of MS Products And Services

Microsoft Action Pack will soon be detached from the Internal Use Rights. This means the product licenses that Microsoft’s partners receive as part of working with the company, will no longer come with free and perpetual use of Microsoft’s products and services. This change in policy has justifiably upset Microsoft’s partners, but the company has some interesting justification. The company has, however, clarified that its products can still be used for developing and garnering business for Microsoft. In other words, vendors and partners can merely use the products and services for demonstration, internal training or solution/services development purposes. But they will soon cease to enjoy the free usage of Microsoft products and services for its own use.

Microsoft has confirmed that after July 1, 2020, the company won’t allow free usage of its products and services by its partners. Microsoft’s Inspire partner event threatened to become a strong anti-Microsoft event primarily because of the company’s revelation about the mounting costs incurred in providing partners with licenses for their own internal usage. Microsoft Partner Network, which was once a surefire platform that granted free licenses to Microsoft products and services for internal usage was being threatened.

Microsoft has made it clear that it will change its internal use rights channel policy, which will obviously have a negative impact on its partners. The company wants the channel to be geared towards successfully and effectively delivering the latest messages, updates, and news about new feature additions about its cloud progress and the adoption of collaborative tools. However, the decision to end the opportunity for partners to enjoy licenses that gave them the rights to use the software internally has been received with strong discontent.

What Are Internal Use Rights Within The Microsoft Action Pack?

Whenever a retail vendor or software or hardware retailer joins Microsoft Partner Network, the company gives free licenses to Microsoft products and services for internal usage. Microsoft offers a comprehensive and rather expensive ‘Microsoft Action Pack’, which, among other things, includes this very important benefit. Essentially, Microsoft allows its partners free and unlimited use of its products and services. The company calls this Internal Use Rights. The practice began in the early 2000s. In other words, Microsoft’s rising number of partners has been able to freely use premium services for free, while Microsoft was footing the bill.

Earlier this month, Microsoft confirmed through a blog post that the company will cease the Internal Use Rights associated with the product licenses partners receive in the Microsoft Action Pack. The delinking will come into effective from July 2020. Essentially this means Microsoft partners have just another year of free usage of Microsoft products and services. Thereafter, they may have to end up paying substantial amounts to continue using the products and services like Office 365, Microsoft 365, Teams, and several other powerful tools that are critical to maintain operational efficiency and achieve sales targets.

Why Is Microsoft Taking Away The Right To Use Its Products And Services From Its Own Partners?

Microsoft has confirmed that there are more than 300,000 partner firms. Moreover, the company has been rapidly adding new partners every month. According to Microsoft’s own claims, the company has been adding new partners at a rate of 7,000 per month. In other words, there are far more vendors and partners that Microsoft currently works with, as compared to a decade ago. Needless to add, this puts tremendous pressure on Microsoft since it has to bear the cost of offering free services to its large vendor base.

During the first few years of the Internal Use Rights program, the majority of the products and services were on-premise installation. In other words, the product licenses that Microsoft gave out for free to its partners were meant to legitimately run software that resided on the vendors’ computers. Essentially, Microsoft was only losing a very small amount of revenue that it would have earned from the sale of the software.

However, over the years, many major software products and services that Microsoft offers, have moved to the cloud. There are very little on-premise installations. As a consequence, Microsoft’s partners today heavily rely on Microsoft cloud services. As part of the Internal Use Rights program, however, Microsoft had to bear the costs of maintaining the cloud-based services. Needless to mention, unlike on-premise software, delivering and offering support for cloud services has a huge recurring cost that Microsoft had been bearing.

Microsoft basically realized that bills for cloud services usage by Microsoft partners have increased substantially in recent years. Microsoft is reportedly spending more than $200 million annually just to support the Internal Use Rights program. Instead of scaling back other parts of the Microsoft Action Pack, the company decided to the end sponsoring the program. Despite the rising discontent among Microsoft’s partners, the company is confident the vendors will understand the reason and accept the same.  Gavriella Schuster, corporate vice president, One Commercial Partner at Microsoft acknowledged the intense dissatisfaction but maintained the decision was only logical as the cost of providing the benefits had become too much to bear. “We can’t actually afford to run every single partner’s organization all around the world anymore, because it’s not free.”

Interestingly, there’s an active petition being shared on social media. As of reporting, more than 6,000 people have signed the same. Several signatories are demanding the reversal of the decision, with some stating that, “partners are an extension of the vendor’s salesforce and deserve to be able to use the products that they are recommending to customers.”

Microsoft Launches New Programs To Boost Partner Participation And Sales:

Microsoft has launched quite a few new programs which are aimed directly at its partners. The company has confirmed the general availability of the Microsoft Security Competency, which allows vendors to “market their expertise and provides access to a range of benefits designed to enable business growth and profitability.” The company is offering Windows Server and SQL Server Migration, Linux and Open Source Databases Migration, Data Warehouse Migration, Modernization of Web Applications, and Kubernetes. All these platforms can now be migrated to Microsoft Azure, which is a highly potent and powerful enterprise cloud-based solutions platform.

To keep vendors and partners motivated, Microsoft is introducing additional pricing models, a rewards program and a new route to market. These will be applicable to companies that publish transact-worthy offers in Microsoft’s expanded commercial marketplace. The new and flexible pricing models include the choice between monthly, annual, custom-metered, and standard billing options, and many more benefits.

[Update] It appears the vendors and partners of Microsoft have won. Microsoft issued a notification that read it was withdrawing all the limits that were to be implemented.


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Alap Naik Desai


A B.Tech Plastics (UDCT) and a Windows enthusiast. Optimizing the OS, exploring software, searching and deploying solutions to strange and weird issues is Alap's main interest.
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