The UK’s Competition and Markets Authority (CMA) is set to launch an investigation into the country’s cloud computing market, after a new report from the communications regulator uncovered a number of market features that it said could limit competition among providers.
The move comes seven months after the communications regulator Ofcom first raised “significant concerns” about Amazon Web Services (AWS) and Microsoft, alleging that they were harming competition in cloud infrastructure services and abusing their market positions with practices that make interoperability difficult.
Three areas were highlighted as being a particular cause for concern: high switching fees, technical restrictions on interoperability, and committed spend discounts. Ofcom’s latest report also outlines concerns it has heard about the software licensing practices of some cloud providers, in particular Microsoft.
During April’s initial investigation, Ofcom said AWS and Microsoft Azure had a combined UK market share of between 60% and 70%, while the next nearest competitor, Alphabet-owned Google, has a 5% to 10% share.
“We welcome Ofcom’s referral of public cloud infrastructure services to us for in-depth scrutiny. This is a £7.5bn market that underpins a whole host of online services – from social media to AI foundation models,” said Sarah Cardell, CEO of the CMA, in comments published in a press release announcing the investigation. “Many businesses now completely rely on cloud services, making effective competition in this market essential.”
The CMA will conclude its investigation by April 2025.
Both Amazon and Microsoft have said they will work constructively with the CMA as it conducts its investigation into the cloud services market, with a Microsoft spokesperson adding that the company is “committed to ensuring the UK cloud industry remains innovative, highly competitive and an accelerator for growth across the economy.”
However, in a lengthier statement, an AWS spokesperson said the company disagrees with Ofcom’s findings and believes they are based on a fundamental misconception of how the IT sector functions, and the services and discounts on offer.
“AWS designs cloud services to give customers the freedom to choose technology that best suits their needs,” the statement continued. “UK companies, and the overall economy, benefit from robust competition among IT providers, and the cloud has made switching between providers easier than ever. Any unwarranted intervention could lead to unintended harm to IT customers and competition.”
AWS also denied charging customers separate fees for switching data to another IT provider, stating that its customers make “hundreds of millions of data transfers each day in the ordinary course of business, and over 90% of our customers pay nothing for data transfer because we provide them with 100 gigabytes per month for free.”
Copyright © 2023 IDG Communications, Inc.
