The EU Just Killed ARR
76 comments
·September 19, 2025flowerbreeze
bilekas
Absolutely, companies who remain stagnant will fall behind if they don't offer something as good as or better than competition. Only shareholders who are concerned about "guaranteed income" regardless of its sources will not like this imo.
spwa4
... of course it's the EU. It won't be enforced against large companies. I mean, it seems to me pretty obvious that this outlaws microsoft office. And yet, it's september, and ...
https://www.coolblue.nl/en/product/963184/microsoft-365-pers...
https://www.coolblue.nl/en/product/952796/adobe-photoshop-el...
Seems to me these trivially violate just about every condition talked about in this article ... yet it's still for sale with no way to cancel and get your money back. Am I missing something?
In fact this store only sells subscription software. That's the only thing available. Non-cancelable, of course. And there's plenty of technical and bundling barriers to switching.
raincole
> Non-cancelable, of course
Have you contacted Microsoft and they rejected your request? EU is not asking SaaS providers to implement a 'Cancel Anytime' button. EU is not banning SaaS providers from selling one-year subscription either.
> this article
You mean this AI slop. The OP's article has very little to do with what EU Data Act is.
A much better article explaining EU Data Act: https://www.twobirds.com/da/insights/2025/the-data-act-what-...
raverbashing
Yeah the only people who would think this is bad are Adobe and companies pulling similar shenanigans
yoavm
If your ARR is built upon the idea that your customers cannot cancel their subscription, you're getting it very wrong.
arnon
ARR assumes customers will stay with you - that's why it's a bad metric.
Glyptodon
This is a silly article. It seems premised on the idea that ARR can only happen with contractual or vendor lock-in. Which is silly. Like most things, if you can get in the door, and aren't price gouging, few people will want to rock the boat for the sake of it.
jerojero
I can't wait to move to Europe and end my Adobe subscription that I forgot to cancel a few months ago.
0x3f
Try downgrading/switching package, then cancelling. At least in my region, this resets the cancellation clock.
sgjohnson
Just adopt the JetBrains model? Each consecutive year of uninterrupted subscription gets you a discount, up to a point.
daedrdev
Offering a discount for longer contracts and jacking up the price for shorter contracts have no noticeable difference to either party.
I feel like this article is thus being overly generous. The EU simply wants consumers to be able to cancel digital products that have no marginal cost anyway, which makes intuitive sense imo.
mehdibl
What is the issue? There is 2 month's notice. If you have bad services and customer don't need it any more makes sense to allow termination, instead of contining to bill customors for nothing.
This is more healthy and would push more SAAS to focus on Sales not building tricks to force retain customers!
arnon
The issue is you can't use the "I'll give you a deeper discount for a 3 year contract" line anymore.
It'll potentially create a situation where customers in the US pay a lot less because they still have that incentive.
jdietrich
>Nothing in this Regulation prevents a customer from compensating third-party entities for support in the migration process or parties from agreeing on contracts for data processing services of a fixed duration, including proportionate early termination penalties to cover the early termination of such contracts, in accordance with Union or national law.
phkahler
>> The issue is you can't use the "I'll give you a deeper discount for a 3 year contract" line anymore.
I don't see why not. You can still offer a low price right? You can still promise it won't go up for 3 years. But the customer can now cancel at any time.
dh2022
Well, if you bought hardware to support that client for 3 years and the client changes their mind 2 months later then you are stuck with this hardware....
some_random
You can, but the thing that you get as a SaaS company in exchange for that 3 year discount is the certainty that you'd have a customer for 3 years. There is no longer an incentive to offer the discount.
mehdibl
Such discounts are prepaid, or you give free period after paying in full for 70% of the period.
Also there is prepayment in a lot of commitment. When you commit on the cloud such contract your PREPAY compute unit and this is not new.
deadbabe
I think you could still do it but it would involve some clever financial engineering.
jolmg
Prepaid annual (or 3-year) contract. No refund once period started.
I think that's how it's generally been. I don't see how this changes things.
dh2022
Someone will have to take the risk that the customer will walk away from the deal. Insurance companies maybe would pool different customers in some insurance pool?
An alternative would be to ask the customer to pay in advance for 3 years. This way both the customer and the producer have an incentive to keep this deal going (if the producer reneges on the deal the consumer can take the producer to court. My reading implies only the consumer can walk away with 2 months notice). But in the world of 6% interest rates who would want to front that much money?
petesergeant
20 years or so ago a gym made me take out a loan from them to pay for a year’s contract in advance, presumably for exactly this reason.
kranke155
Prepaid contract. This is a false issue.
dh2022
In the world of 6% interest rates it is expensive to pre-pay. So definitely an issue. Prepaying also takes away some of cloud computing's financial flexibility .
some_random
Most enterprises don't want to prepay, especially if they can't categorize the spend in an efficient way (ie as CAPEX)
bearjaws
Seems like great for competition, if someone can steal your business you have a bad business.
arnon
Agreed, but it does open up some cans of worms where you may accidentally lose customers when they forget to renew (even if they meant to)
condiment
The article is hyperbole and this only impacts ARR for consumer services, which tend to be either month-to-month paid in arrears, or annually prepaid. It doesn't change anything, but if your gym membership goes high-tech it might be easier to cancel.
The specific provisions[1] covering unfair contract terms apply only to "unilateral" contracts, meaning contracts that are offered to a customer who meets two important criteria. First that they attempted to negotiate specific terms in the contract. Second that they had no ability to influence those terms but continued to purchase the service anyways. Real, scaled, committed SaaS ARR isn't going anywhere.
[1] https://eur-lex.europa.eu/eli/reg/2023/2854/oj/eng#cpt_IV
jorams
This article is just a lie and also seems deeply confused. First it talks about the (false) claim that you can no longer count a yearly contract as such, then it switches to "involuntary churn" without at any point explaining why those concepts are related in any way.
The regulation[1] explicitly says:
> Nothing in this Regulation prevents a customer from compensating third-party entities for support in the migration process or parties from agreeing on contracts for data processing services of a fixed duration, including proportionate early termination penalties to cover the early termination of such contracts, in accordance with Union or national law.
xalava
The article mixes two months notice cancellation, non-recurring contracts, and business predictions. It is AI generated randomness for marketing.
nabla9
This is amazing pro-market regulation!
As a user, this is great news. I think that the artificial lock-in to services that have near zero cost of on-boarding and off-boarding is not what nice companies should do.
As an entrepreneur, this is amazing news! This means users can now more easily switch to my superior service.
At least this is how I choose to see it. It seems to encourage healthy competition and I'd rather compete on the service quality and value than the cleverness of my contracts and discounts. I'm sure it will hurt the bottom line of some companies, but I'm not sure it's a bad thing.