Welcome to the Microsoft Licensing Update June 2025. Our licensing expert Floris Klaver has compiled all the key updates you need to be aware of below. Keep reading and stay informed.

Dynamics 365 Finance and Operations: License Validation

Microsoft is rolling out updates to license management for Dynamics 365 Finance and Operations. Here are the key changes:

• April 30, 2025: Administrators will (already have) gain(ed) access to license usage reporting in the Power Platform admin center, providing insights into available and assigned seats.
• September 1, 2025: Users without assigned licenses will receive in-product notifications, prompting them to contact their administrator.
• November 1, 2025: Users must have an assigned license to access Dynamics 365 Finance and Operations applications, including Finance, Supply Chain Management, Commerce, Project Operations, and Human Resources.

With this, Microsoft is encouraging organizations to review license reports and assign licenses proactively to ensure a smooth transition. We’ve already seen cases where Microsoft is actively telling their customers that they are out of compliance, using the new Power Platform dashboard to their benefit. So if you are a Finance and Operations company, please make sure to check the report and if the findings there match your actual environment. We’ve already heard of a few cases where the license requirements did not match the Power Platform report, so do your own analysis!

SQL Server 2025: New release

SQL Server 2025 is designed as an AI-ready enterprise database, integrating AI capabilities directly into the SQL engine. Here are the key highlights:

• AI Integration: Supports vector searches, enabling hybrid AI applications that combine traditional SQL queries with AI-powered similarity searches.
• Enhanced Model Management: Allows seamless interaction with Azure OpenAI, OpenAI Endpoints, and Ollama, ensuring secure AI model deployment.
• Retrieval-Augmented Generation (RAG): Facilitates AI-driven data retrieval, improving search accuracy and efficiency.
• Scalability & Performance: Introduces Approximate Vector Index and Vector Search, leveraging Approximate Nearest Neighbors (ANN) for faster results.
• Hybrid Search Capabilities: Combines keyword and vector searches, unlocking deeper insights for businesses.

It seems SQL Server 2025 is continuing with the current licensing model. As of yet, it does not look like the licensing model will receive an update. It is available now for public preview, which you can sign up for here.

Retiring Microsoft Project for the web

As per the announcement here, Microsoft is transitioning Project for the web into Microsoft Planner, aiming to streamline work management tools across Planner, To Do, and Project. The changes involved with this are as per below:

• August 2025: Project for the web, along with the Project and Roadmap apps in Microsoft Teams, will be retired. Users will be redirected to Planner for the web and Planner in Teams.
• Unified experience: Planner will integrate premium plans from Project for the web, ensuring seamless access to features like Goals, Sprints, Task History, Advanced Dependencies, Baselines, and AI-powered work management tools.
• No migration required: Existing plans in Project for the web will be accessible in Planner without requiring manual migration.
• Teams integration: Users will need to re-pin their tabs in Teams using the Planner tab, as the Project and Roadmap tabs will no longer open associated projects.

This transition is designed to streamline work management and enhance collaboration within a single platform. Of course, it wouldn’t be complete with the addition of Copilot for Planner (preview) and a new Project Manager agent in M365 Copilot. With this change you need to actively notify your users of the upcoming change. According to Microsoft there should not be any changes to the pricing of this.

Product Terms Updates

General

Azure Open AI Service has been generally replaced by Azure AI Foundry Models (includes Azure Open AI)

Universal Licensing Terms for Online Services

Microsoft clarified that Cloud Add-ons to SA must be purchased under the same licensing agreement as their Qualifying License or base User SL, rather than all SLs with pre-requisites.

Privacy and Security Terms

Microsoft Dragon Copilot was added to the Security Practices and Policies for Core Online Services table, meaning it is SSAE 18 SOC 1 Type II and SSAE 18 SOC 2 Type II compliant.

Additionally, it received its own entry in the Data at Rest part of this page. This states that Microsoft Dragon Copilot stores Customer Data at rest based on the Microsoft 365/Microsoft Entra ID tenant location: tenants in the US, Canada, France, and Germany have data stored within their respective Geos, while tenants in Ireland and Belgium have data stored in France, and tenants in Austria and the Netherlands have data stored in Germany. It is also covered by the EU Data Boundary Services, so if your tenant is created in the EU or EFTA then this Data Boundary is enforced automatically.

Azure

• Microsoft added Azure App Service Plan to MCA availability table.
• A clarification was added on External Identities in Entra ID, stating that these External Identities can only be used for their External Users.
• An additional clause was added on Entra ID Governance, stating you may use Microsoft Entra ID Governance for External Identities) only for their External Users.
• Under Azure Communication Services an additional clause was added that requires you to make it known to users of your application if and when a Microphone is being accessed.
• Azure AI Foundry: New entry to this page, but is an update clause from the removed Azure Open AI Services clause. This clause states: “Azure AI Foundry provides access to AI Services and Machine Learning under applicable terms. It includes third-party models, which follow Non-Microsoft Product terms, and Microsoft models, categorized as First-Party Consumption Services or Azure Direct Models. Microsoft reserves the right to designate certain Azure Direct Models as Limited Access Services with additional usage monitoring. Customers can use Azure Direct Models to generate synthetic data for fine-tuning approved model types. Specific DeepSeek Models, such as DeepSeek-R1 and MAI-DS-R1, are covered by the MIT License. The Azure AI Foundry Agent Service provides starter templates and code samples to assist users in developing AI agents, but customers are responsible for compliance with regulatory requirements.”
• The above change seems to be in line with Microsoft’s promise to allow more AI models on their platform (see the recent Build announcement on Grok for instance). There are some changes to the previous Open AI clause, outlined here: Azure AI Foundry and Azure OpenAI Service both provide AI capabilities but differ in scope and model management. Azure AI Foundry integrates multiple AI services, including Azure Machine Learning, and offers a Model Catalog/Registry with third-party and Microsoft models, whereas Azure OpenAI Service focuses on OpenAI-powered models only. Both services implement Data Use and Abuse Monitoring policies, temporarily storing Input and Output Content for security, with exceptions for modified monitoring. They allow the use of synthetic data for fine-tuning, though Azure AI Foundry supports a wider range of models, including DeepSeek models, while Azure OpenAI primarily fine-tunes OpenAI and Azure AI models. Azure AI Foundry serves as a broader platform, while Azure OpenAI Service is dedicated to OpenAI model deployment and applications.

Power Platform

Microsoft Copilot Studio has been added as a Covered Product under their new Azure AI Foundry or Copilot framework. With this change, Microsoft covers Copilot Studio under their Customer Copyright Commitment (CCC) because it has configurable Metaprompts and other safety systems. To receive copyright protection, customers must follow clause 5 of the CCC and implement required safeguards, ensuring AI outputs comply with copyright rules. These mitigation steps are documented in the CCC Required Mitigations page.

Glossary

• Added Azure Direct Model definition: This is an AI model designated and deployed as an Azure Direct Model in Azure AI Foundry.
• Removed the Add-On definition and replaced it with the Cloud Add-on to SA: Both Add-on and Cloud Add-on to SA licenses are purchased in addition to a Qualifying License, but Cloud Add-ons specifically require Active Software Assurance (SA). While Add-ons can be assigned to a Qualified User, Server, or device, Cloud Add-on to SA licenses are assigned only to a Qualified User. If an Add-on User SL or Cloud Add-on to SA User SL is not individually listed, it follows the license terms of a full User SL for the same service.
• Updated Covered Product: in line with the change to Azure AI Foundry

Other Microsoft Updates

As of June 1st, the 3-year licensing term option for M365 E3 and E5 (without Teams) has gone live. Additionally, the Teams Enterprise can be bought and locked-in for a three-year term as well. As of July 1st, Microsoft 365 E5 Security and Microsoft E5 Compliance will also be available for a 3-year term. We have seen these on the pricelist, however haven’t seen the promotional pricing available yet.

Microsoft announced on Wednesday, May 14, 2025, that the Microsoft 365 Business Premium grant and Office 365 E1 grant on CSP and Web Direct Channels will be discontinued for nonprofit customers upon their next renewal date on or after July 1, 2025. This is just in regard to these products, up to 300 licenses of Business Basic remain available, and the non-profit pricing model has also not been touched (yet).