Microsoft Partners Warned of Punishment for Violating Compliance Rules

Microsoft partners who fail to follow the company’s code of conduct stand to lose their incentives, and even pay back the ones they’ve earned.

That’s according to a July 5 blog that aims, per Microsoft, “to make partners aware of enhancements to the consequences for partners who violate Microsoft’s partner compliance requirements.”

It’s not clear whether any particular spate of activity prompted Microsoft to beef up its rules. (More on that below.) The company did not respond to Channel Futures’ inquiries by time of publication.

Are Microsoft Partners Getting Enough Communication from the Vendor?

Has Microsoft done its due diligence in informing partners about the consequences of noncompliance? That depends on whom you ask.

Peter Fidler, president and founding partner of WCA Technologies, also serves as president of the New York City chapter of the International Association of Microsoft Channel Partners. As head of both WCA Technologies and the local IACMP, Fidler says he has seen no information from Microsoft about its enhanced penalties for noncompliance.

WCA Technologies’ Peter Fidler

“This information wasn’t brought up on [an IACMP] board call either,” he told Channel Futures.

It would seem that Microsoft needs to do more to communicate its new changes regarding compliance requirements. In its July 5 blog, it did take two small actions: It pointed readers to their Microsoft account representative “for more details on how to access materials on compliance-related topics.” It also linked to its page on anticorruption, rather than to its overall Partner Code of Conduct, which covers business and fair labor practices, ethics, compliance, human rights, professional conduct and more. (Could this mean that Microsoft is seeing an uptick of bribery, kickbacks or similar actions among its partners, prompting the ramped-up penalties?)

Indeed, finding details on the overarching Microsoft Partner Code of Conduct yields differing results, which could easily cause confusion. Channel Futures did locate a downloadable PDF last updated in 2019. Then, on another page, one for Microsoft’s “Required Training” with the link to the so-called Trust Code PDF, we encountered a “This file no longer exists” error. These two searches alone would indicate that gathering updated and accurate compliance guidelines could prove onerous for Microsoft partners unless the company uploads the information into an obvious place in their portals.

Fortunately, Fidler, for his part, isn’t worried about breaching compliance requirements but he is concerned about the apparent lack of communication from a key vendor.

“With other vendors, I’m required to take their training on compliance,” he said. “That’s something we take very seriously.”

From Microsoft, though, there seems to be a dearth of both formal training and partner outreach.

“I am all for enforcing compliance requirements,” Fidler said. “My fear is a reputable company being unaware that they are violating a code of conduct or have a rogue staff member. It would be good to find out what training resources are available on this topic.”

That raises the question: Rather than hoping Microsoft partners read a blog and reach out to their account managers, shouldn’t Microsoft take far more proactive steps to increase compliance awareness?

What Microsoft Partners Can Expect for Noncompliance

Microsoft partners found to violate the company’s compliance rules will face big consequences. Expect increased penalties, which could even include the revocation of a partner’s authorization to sell Microsoft services and platforms.

“Partners with repeated instances of noncompliance will be required to participate in Microsoft’s Partner Accountability and Remediation program — a multistep program of work designed to improve a partner’s compliance capabilities,” Microsoft wrote on July 5. “Partners who enter this program because of multiple infraction occurrences might have their incentives payments withheld until Microsoft determines that they’ve successfully completed the program. Failure to participate in this program might result in offboarding from Microsoft’s partner programs.”

Other Microsoft partner punishments for breaching compliance requirements include undergoing training, losing incentives and having to pay Microsoft back for incentives “earned through noncompliant behavior.” And, in some cases, Microsoft will go so far as to pull the ability to sell within certain partner programs, or the entire ecosystem altogether.

“We’re committed to winning in the market ethically and in compliance with the laws and regulations of the countries/regions in which we operate,” Microsoft wrote.

‘I Am Curious About the Timing’

For Fidler, the seeming absence of direct communication to Microsoft partners about the new compliance enforcement compounds some ongoing frustration.

He and many of his peers just underwent a difficult transition to the New Commerce Experience, he said. Recall the many controversies tied up around that initiative and it’s easy to see why Fidler – and likely others – might react with reticence to Microsoft’s noncompliance blog.

“I am curious about the timing of this,” he said. “Last year was a tough year for Microsoft partners. A lot of my colleagues were left with a bitter feeling.”

Therefore, when it comes to Microsoft’s “enhanced” approach to compliance with the Partner Code of Conduct, “I am going to reserve judgment until I know more about this,” Fidler said.