500 Million Euros for Microsoft Licenses

And what this figure means for Europe’s digital capability.

The federal administration spent 481.4 million euros on Microsoft licenses in 2025. In 2023, it was 274.1 million euros, and in 2024, it was already 347.7 million. Over two years, spending has increased by more than 75 percent.

This dynamic is more than a budgetary footnote. It is an indicator of structural dependencies—and a digital procurement practice that has long ignored strategic questions.

As a company focused on digital sovereignty, open technologies, and European value chains, we view this development with concern—but also with a clear understanding of the realities in administration and the market.

How Dependency Arises—and Why It Is So Stable

Microsoft is not market-defining due to a single product but because of the integration of an entire ecosystem: operating system, office applications, collaboration, identity management, security, cloud infrastructure. Technically, much is seamlessly integrated, organizationally well-established, contractually bundled.

For authorities, this means: stability, familiar workflows, predictable operational models.

At the same time, lock-in effects emerge. The more processes, data models, interfaces, and security architectures are tailored to one provider, the higher the switching costs become. Migration is not merely an IT decision but a transformation project with organizational, legal, and security implications.

This explains why spending increases, even though the political goal of “digital sovereignty” has been articulated for years.

The Real Gap: Lack of an Overall Strategy

Particularly problematic is not the individual licensing decision but the absence of a federally coordinated overall strategy. When the federal government, states, and municipalities each procure independently without a binding target architecture, parallel dependencies arise.

Transparency about the actual total costs in the public sector is currently limited. Without this transparency, however, the foundation for strategic negotiations, diversification decisions, and a realistic exit perspective is missing.

Digital sovereignty is not merely a technical issue. It is a question of governance capability, bargaining power, and long-term options for action.

What This Means for European Providers

For European software and cloud providers, this situation poses a structural hurdle.

Many of them develop powerful solutions in areas such as collaboration, cloud infrastructure, identity management, security, or specialized applications. Technologically, alternatives exist. What often lacks are large-scale reference projects in public administration.

Yet these references are crucial in the B2B and public sector market. Without references, there is no scaling. Without scaling, there is no price competitiveness. Without price competitiveness, there is no chance in the next procurement process.

Moreover, the licensing models of large US providers are often designed so that operating certain workloads outside their own cloud ecosystem becomes economically less attractive. Even if no formal exclusivity exists, factual competitive disadvantages arise.

For European providers, this means:

• They compete not only technologically but against established ecosystems.
• They must overcome integration hurdles created by proprietary standards.
• They fight for pilot projects while established providers can rely on existing framework agreements.

This is not a criticism of individual procurement offices. It is a structural market situation that needs to be addressed politically.

500 Million Euros as a Strategic Lever

Almost half a billion euros per year is a significant amount. It shows the economic weight of public IT procurement.

These funds could also be used prospectively to:

• Mandate open standards,
• Strengthen interoperability as a procurement criterion,
• Promote modular architectures instead of monolithic complete solutions,
• Intentionally integrate European providers into reference architectures,
• Systematically build open-source competence in administration.

This does not mean abruptly shutting down existing systems. It means considering a clear diversification strategy in upcoming contract renewals, migrations, and modernization projects.

Digital sovereignty does not arise from a radical cut but through consistent architectural decisions over several years.

Why It’s About More Than Costs

License expenditures are visible. Less visible are strategic risks: price adjustments in subscription models, technological dependencies in AI integration, regulatory uncertainties in transatlantic data traffic.

Those who bundle central administrative processes long-term in a non-European cloud stack reduce their own governance options. In stable times, this may seem unproblematic. In geopolitically tense times, it becomes a strategic question.

Digital infrastructure is now part of state public services. Accordingly, it must also be treated as a strategic asset.

Our Position

We are convinced: Europe has the know-how, companies, and innovative strength to build viable, competitive alternatives. What is missing is a consistent demand policy that systematically integrates these alternatives.

Public procurement plays a key role here. It decides not only on individual projects but on market structures.

The 500 million euros per year are therefore not just a number. They are a signal. A signal of how strong existing dependencies are—and how great the leverage would be if used strategically.

Digital sovereignty is not achieved through Sunday speeches. It arises through architectural decisions, contract design, standards, and reference projects. And through the courage to gradually take new paths.

For us, it is clear: European providers need fair competitive conditions and real opportunities for scaling. Open technologies and interoperable systems are not an ideological project but a prerequisite for long-term capability.

The current development should therefore not only be read as a cost increase. It should serve as an occasion to fundamentally review the digital procurement strategy—with prudence, but with clear direction.