The dominance of Amazon and Microsoft in the UK’s cloud market is facing investigation by the competition regulator, following concerns raised by the telecoms watchdog Ofcom. The investigation will focus on the difficulties faced by UK businesses in switching and using multiple cloud suppliers, with particular concern about the position of Amazon and Microsoft as market leaders.
The investigation raises the possibility of a battle between the Competition and Markets Authority (CMA) and Microsoft, following their previous clash over the tech firm’s takeover of Activision Blizzard. The CMA will conduct an independent investigation to determine whether there is an adverse effect on competition and, if so, whether action should be taken.
Ofcom’s study found that Amazon and Microsoft had a combined market share of 70% to 80% in 2022, with Google as their closest competitor with a share of up to 10%. The watchdog highlighted concerns about egress fees, which are the charges customers pay to transfer their data out of a cloud. Ofcom noted that these fees were set at significantly higher rates by the dominant players compared to other providers. The watchdog also expressed worries about committed spend discounts that could incentivize customers to use a single major firm for their cloud needs, making it challenging for customers to switch or use multiple providers.
The investigation aims to address these concerns and ensure that UK businesses can benefit from fair competition in the cloud services market. The cloud is the foundation of the digital economy, enabling companies to run and grow their businesses by relying on remote computer power. However, some businesses have expressed concerns about the difficulty of switching or mixing cloud providers, raising questions about the effectiveness of competition in the market.
The inquiry by the CMA is expected to conclude by April 2025, and its findings will be crucial in determining whether action should be taken to address the dominance of Amazon and Microsoft in the UK’s cloud sector.