October 2025 Listed Provider Restrictions: The End of SPLA on Public Clouds

It is now 2026, but in October last year, an important restriction came into force that you may have overlooked.

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Microsoft announced these changes in October 2022 and granted a three-year transition period. If you host your end customers' workloads with the Listed Providers and report licences through your SPLA, you could only do so until 30 September 2025. After this date, any further use of SPLA licences with the Listed Providers will be considered non-compliant.

On September 30, 2025, Microsoft implemented one of the most significant changes to its Service Provider License Agreement (SPLA) program in its history. Service providers are no longer allowed to use their own SPLA licenses in the environments of Listed Providers as of October 1, 2025. This fundamental shift will force thousands of managed service providers (MSPs) and hosting companies to completely restructure how they deliver Microsoft software to their customers, potentially resulting in significant cost increases and operational disruption.

What are Listed Providers?

Microsoft defines Listed Providers as the dominant global hyperscalers. Currently, these include:

• Microsoft Azure
• Amazon Web Services (AWS)
• Google Cloud Platform (GCP)
• Alibaba Cloud

These hyperscale cloud platforms have been designated by Microsoft as environments where third-party service providers can no longer use their own SPLA licenses after September 30, 2025.

The historical context

The SPLA program was originally designed to allow partners to offer hosted services from their own datacenters. Microsoft believes the SPLA program, originally intended for partners offering hosted services from their own data centers, is being misused by managed service providers who purchase SPLA licenses and then host customer workloads on third-party data centers instead of their own infrastructure.

This permission resulted in various fruitful collaborations and partnerships between providers, allowing them to offload some end-client VMs to hyperscalers like AWS. However, Microsoft now views this practice as contrary to the program's original intent and is moving to close what it perceives as a loophole.

The prohibition

Effective September 30, 2025, MSPs cannot use their own SPLA licenses on Listed Providers' infrastructure. This means that any service provider currently reporting SPLA licenses for workloads running on AWS, Azure (non-Microsoft SPLA), Google Cloud, or Alibaba must transition to alternative licensing models.

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Microsoft's restriction targets only the Listed Providers. SPLA remains valid on non-listed hosters and on infrastructure that the provider owns and operates. Regional hosting providers, and companies operating their own data centers can continue to use SPLA without interruption.

What remains allowed

While service providers cannot use their own SPLA licenses on Listed Providers, Listed Providers (e.g., AWS) can still sell their own SPLA licenses (e.g., "license-included" EC2 instances). This means that AWS, Azure, Google Cloud, and Alibaba can continue to offer Microsoft software as part of their "license-included" services.

MSPs face the most immediate and severe impact from these changes. MSPs could previously undercut the listed provider's hyperscaler pricing by reselling SPLA licenses on cheaper third-party clouds, and then outsource SPLA workflows back to listed providers. This arbitrage opportunity has been fully eliminated since September 30, 2025.

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Providers that have built their entire business model around SPLA licensing on hyperscaler infrastructure must now choose between:

• Migrating workloads to non-listed providers or their own infrastructure
• Absorbing significantly higher licensing costs from hyperscalers
• Transitioning to alternative licensing programs like CSP-Hoster
• Exiting the Microsoft hosting business entirely

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For end customers: Expect price hikes for cloud-hosted Microsoft software and stricter compliance audits. Customers who have been enjoying cost-effective Microsoft solutions through their MSP will likely see price increases as providers either pass through higher hyperscaler licensing costs or invest in building their own infrastructure.

The winners: Hyperscale cloud providers!

Service providers have five primary paths forward:

1. License-included services from hyperscalers

The simplest but most expensive option. Purchase SPLA licenses directly from the hyperscaler (e.g., AWS's "license-included" pricing). The hyperscaler manages compliance, but you'll likely pay significantly more than current SPLA rates.

2. Bring Your Own License (BYOL)

Customers use Enterprise Agreement or subscription licenses on dedicated infrastructure. However, BYOL is complex to manage and comes with additional audit risks. Microsoft has been clear that BYOL hasn't seen significant uptake even after relaxing rules in 2022.

3. Migrate to Non-Listed Providers

Move workloads to regional hosting providers or breadth hosters that operate their own infrastructure. This allows you to continue your existing SPLA business model without change, but requires technical migration effort.

4. CSP-Hoster Program
   
   This program supplements but doesn't replace SPLA. It offers increased margins (up to 15% in some cases) and relaxed licensing rules, but requires Tier 1 CSP Direct status, a massive undertaking involving platform commitments and support requirements. CSP-Hoster is not yet a complete SPLA replacement.
   
   
5. Build Your Own Infrastructure

Invest in your own data centers or colocation infrastructure to continue using SPLA. This requires significant capital and operational expertise but provides long-term control.

Automated inventory 

Before you can move, you must know what you have. Octopus Cloud automatically scans your infrastructure to identify every Windows Server, RDS and SPLA-relevant products on instances running on AWS, Azure, or GCP. It highlights "at-risk" workloads that are no longer compliant under SPLA, preventing costly audit penalties.

Cost-benefit transformation modeling

Should you migrate to your own data center, move to a non-listed regional hoster, or adopt the CSP-Hoster program? Octopus Cloud provides data-driven simulations, comparing the financial impact of each path so you can choose the most profitable business model for 2026 and beyond.

By leveraging Octopus Cloud, Service Providers can turn a compliance crisis into a strategic evolution, ensuring a seamless migration while protecting their margins.