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What changes with the Microsoft Customer Agreement?

What changes with the Microsoft Customer Agreement?

February 20, 2020

The Microsoft Customer Agreement (MCA) has been in force since February 2020. It replaces the previously valid agreement, the Microsoft Cloud Agreement. Many customers have questions about the changes. The fact is, not much will change, but those who do not accept the MCA can no longer be supplied with cloud subscriptions. Read here what the new agreement contains and what will change in concrete terms.

Agreement with legally binding signature

You cannot accept the Microsoft Customer Agreement online. As a cloud customer, you must agree to the terms through your Microsoft partner. The Microsoft partner is responsible for collecting the signatures. It is important to know that an authorised person from your organisation must agree and sign because it is an official legal document. So it is imperative that the right person signs the agreement.

As a customer, you can sign the Microsoft Customer Agreement for your organisation and any affiliates. An affiliate is an organisation that is affiliated with your organisation, usually a subsidiary, local office or sister company, in which your organisation owns at least 50.1% of the shares. Even though you can accept on behalf of your affiliates, the signing organisation is responsible and liable for the affiliates.

Compliance with the agreement is reviewed

The agreement also contains a chapter on compliance monitoring. In it, you can read that you are obliged to cooperate with a verification and face consequences if you are found to be non-compliant. If the unlicensed use is more than five per cent of the total use, you as a customer must pay for the verification or audit and purchase enough licences to cover the shortfall at 125% of the current list price (i.e. no rebates). In addition, and importantly to verify compliance, you as the client must keep records of licences, subscriptions and the allocation of those licences and subscriptions.

Cloud subscription and data protection

As the agreement covers Microsoft cloud subscriptions, there is a technical need to record and process personal data (think of a username/account associated with an Office 365 subscription). The agreement states that personal data "may" be transferred and processed in the United States of America (for EU countries, personal data is mainly processed within the EU). It also states that Microsoft complies with the EU General Data Processing Regulation.

Warranty and liability

The warranty for cloud services is in accordance with the respective Service Level Agreements (SLA). For all other products, the warranty is limited to one year (12 months) after the purchase of the licence and applies only to "current" products (i.e. no older versions).

Liability is limited to the purchase price of the product. For online services this is 12 times the monthly price and for other products the licence price. This limitation of liability does not apply if confidentiality or intellectual property rights are violated.

Choose your partner wisely!

The customer can select an authorised Microsoft Cloud Solutions Provider (CSP) to assist and place orders on behalf of the customer. When a partner is selected, the customer can give the partner administrative rights for their (cloud) environment and the partner is responsible for support. So it is important to choose your partner (provider) carefully!

Once you have selected a partner, payment must be made to the partner. If you are buying directly from Microsoft, it is good to know that you must pay within 30 days of the invoice date. If you are 15 days in arrears, Microsoft has the right to add two percent of the outstanding payments each month.

MCA is open-ended and has the highest priority

The Microsoft Cloud Agreement is an evergreen agreement with no end date. However, both parties have the right to terminate the agreement without giving reasons with a notice period of 60 days. At the same time, Microsoft is entitled to make adjustments to the MCA and require you to agree to the new agreement before a new order can be processed.

The Microsoft Customer Agreement prevails over any conflicting provisions in other agreements, except for the rights of use for the corresponding products.

Read the agreement carefully

We have hereby presented to you the highlights of the Microsoft Customer Agreement. We strongly recommend that you read the agreement carefully before agreeing to its contents by signing it.

Contact us if you need assistance. Do you have further questions or need advice on your software licensing or cloud subscription agreements? Let one of our licensing and cloud experts help you.

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Want to learn more about modern software asset management?

Contact me or my colleagues in the Modern SAM team and find out how to avoid compliance and financial risks and modernise your business through IT.

Erol Anil

Managing Director
SYCOR IQ Solutions GmbH
+49 89 307 731 32

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