UK Regulator Launches Investigation into Amazon and Microsoft’s Dominance in Cloud Computing Market
The UK’s competition regulator, the Competition and Markets Authority (CMA), is set to investigate the dominant position of tech giants Amazon and Microsoft in the country’s cloud computing market. The investigation comes after communications regulator Ofcom raised concerns following its own inquiry into the sector.
Ofcom’s year-long investigation found that business customers encountered barriers when attempting to switch cloud suppliers, prompting concerns about the position of Amazon and Microsoft, who collectively hold a market share of 70 to 80 percent. In contrast, their closest competitor, Google, only holds a 5 to 10 percent share.
Ofcom expressed particular worry about the potential deterioration of competition in a critical digital market for the UK economy. Fergal Farragher, Ofcom’s director responsible for the market study, highlighted concerns raised by UK businesses regarding the difficulty of switching or mixing cloud providers and the need for effective competition in the sector.
The CMA’s investigation will focus on identifying competition concerns in the market and determining the interventions required to improve the supply of cloud services for UK customers. Sarah Cardell, CEO of the CMA, emphasized the importance of strong competition to ensure a level playing field and unlock the full potential of digital markets.
The cloud computing market, which supports a range of online services, including social media and AI, is valued at £7.5 billion in the UK. Ofcom acknowledged that there is still competition in the sector with innovative products and discounts available to new customers. However, concerns were raised regarding the high fees charged by leading firms for moving data out of the cloud and the inability to effectively use multiple cloud providers simultaneously.
The CMA’s referral presents an unprecedented opportunity to create a truly competitive cloud market, giving companies the freedom to develop cutting-edge services and customers the flexibility to find the best solutions for their needs. Urgent changes, such as addressing excessive egress fees and restructuring services to enable simultaneous access to multiple providers, are needed to improve the market’s fairness and openness.
The investigation aims to restore balance in the market and ensure that market power is not concentrated in the hands of a few players. By doing so, the potential benefits of cloud computing can be fully realized, benefiting individuals, businesses, and the overall UK economy.
In conclusion, the CMA’s investigation into Amazon and Microsoft’s dominance in the UK’s cloud computing market demonstrates the government’s commitment to fostering competition and innovation in the digital sector. By addressing the concerns raised by Ofcom, the investigation aims to create a more level playing field, empowering businesses and customers alike.