News

Microsoft Drops Plans To Bar Automatic Monthly Renewals of Cloud Services Accounts

• By Kurt Mackie
• 06/29/2022

Microsoft has changed course somewhat and won't block automatic renewals of existing monthly cloud services accounts offered under an older plan overseen by Cloud Solutions Provider (CSP) partners.

The blocking of automatic renewals of these older (or "legacy") CSP subscriptions was supposed to take place on July 11, 2022, according to Microsoft's earlier described plans to shift customers to its New Commerce Experience subscription model. However, these automatic renewals for the older account types are now "extended indefinitely," per a June 27 Microsoft announcement, spotted by The Register.

The New Commerce Experience subscription model essentially puts customers subscribing to Microsoft's services on annual payment plans, eliminating a monthly payment option. This subscription model applies to services such as Dynamics 365, Microsoft 365 and the Power Platform (Power Apps, Power BI, Power Automate, etc.).

New Subscriptions Still Blocked
Microsoft has already blocked customers from signing up for new CSP subscriptions that have the older option of making monthly payments. This block happened on March 10, 2022, and it's still in effect.

CSP partners were supposed to steer their customers paying by month under the old plan to Microsoft's New Commerce Experience subscription model, where customers would pay annually. However, some partners cried foul and urged Microsoft to keep the monthly option via a Change.org petition.

20 Percent Price Hike
The petitioning partners had also complained about the 20 percent fee hike that Microsoft planned to impose on the monthly billed customers that refused to switch to the New Commerce Experience. Microsoft's announcement didn't mention any rescinding of this 20 percent fee hike, so it's likely still in effect.

Microsoft still wants its CSP partners to steer customers to the New Commerce Experience model before the July 11, 2022 date, but it made a "made a business decision" not to block renewals under the old model, per the announcement.

Microsoft perhaps listened to its complaining CSP partners. If so, it stopped short of providing them full redress. For instance, Microsoft is still planning to stop paying CSP partners "monthly incentive rebates" for the legacy subscriptions. The cutoff date for these monthly incentives will be on Jan. 1, 2023, the announcement indicated.

Partners on the Hook?
Putting customers on annual payment plans was seen by the petitioning CSP partners as inflexible in terms of business needs and not realistic in terms of sales. Microsoft was said to be complicating the sales process unnecessarily with its CSP changes.

Moreover, one petitioner noted that partners will take on more risk under the annual plans of the New Commerce Experience.

"If we sell the annual subscriptions, the CSP partner is on the hook to pay for the licensing, even if the customer goes out of business, or wants to end the relationship with the CSP for any reason," one petitioner lamented.