Microsoft and Amazon may face regulatory scrutiny in the UK for potentially impeding customers’ ability to use multiple cloud service providers. The Competition and Markets Authority (CMA), the country’s antitrust regulator, announced on Thursday that it is launching an investigation into the UK cloud infrastructure services market to assess potenial anti-competitive practices.
Cloud computing companies, including Microsoft and Amazon Web Services (AWS), utilize global data centers to offer remote access to computing services and storage. This “cloud infrastructure” serves as the foundation for various software applications, such as Gmail and Dropbox.
The CMA’s investigation follows a report from Britain’s media and communications regulator, Ofcom, which revealed that the UK cloud infrastructure supply is highly concentrated, resulting in limited competition.
According to Ofcom, Microsoft and AWS held a combined market share of 70-80% in the UK cloud infrastructure services market in 2022, with Google as their closest competitor, holding a share of 5-10%.
Sarah Cardell, CEO of CMA, stated, “We welcome Ofcom’s referral of public cloud infrastructure services to us for in-depth scrutiny. This is a £7.5 billion market that underpins a whole host of online services — from social media to artificial intelligence foundation models. Many businesses now completely rely on cloud services, making effective competition in this market essential.”
“The CMA’s independent inquiry group will now carry out an investigation to determine whether competition in this market is working well and if not, what action should be taken to address any issues it finds” she continued.
The CMA expects to conclude its investigation by April 2025. This probe reflects the ongoing trend of increased oversight of major tech companies by European regulators, who have introduced stricter rules in areas such as data protection and targeted advertising. The European Digital Services Act, which took effect in August, is a comprehensive effort to regulate tech giants like Amazon, Apple, Google, Microsoft, Snapchat, TikTok, and Meta (owner of Facebook and Instagram).
Ofcom’s report highlighted factors that hinder customers from changing providers or using multiple providers, such as switching fees. These challenges could potentially impede competition and limit the ability of competitors to challenge AWS and Microsoft effectively.
The report also expressed concerns about the software licensing practices of some cloud providers, particularly Microsoft.
Both Amazon and Microsoft have committed to engaging “constructively” with the CMA. AWS expressed disagreement with Ofcom’s findings, stating that they are based on a fundamental misconception of how the IT sector operates and the services offered. AWS emphasized that the cloud has made switching between providers easier than ever.
