UK Cloud Giants Under Investigation for Anti-Competitive Practices: Microsoft and AWS in Regulatory Crosshairs
The Competition and Markets Authority (CMA) in the UK has launched a full-scale investigation into cloud infrastructure companies, namely Microsoft and Amazon Web Services (AWS), over potential anti-competitive practices. The concern is that these cloud giants make it difficult for businesses to switch providers or use multiple platforms.
The CMA’s inquiry follows a market study initiated by Ofcom last year into the £7.5 billion UK cloud services market. Ofcom had identified concerns that warranted further investigation, leading to the CMA’s involvement. The market investigation will examine the cloud market to determine if there are any competition concerns.
CMA CEO Sarah Cardell emphasized the importance of strong competition in the cloud market, as many businesses rely on these services. A level playing field ensures that market power is not consolidated in the hands of a few players, unlocking the full potential of the digital market and benefiting people, businesses, and the UK economy.
The focus of the investigation lies on whether AWS, Microsoft, and Google engage in anti-competitive practices that lock customers into their ecosystems. Ofcom’s report specifically highlights AWS and Microsoft due to their dominance in cloud revenue, accounting for up to 80% between them.
One area of concern is the egress fees charged by these cloud behemoths for moving data out of their platforms to rival companies. These non-transparent fees can make it prohibitively expensive for businesses to switch providers. Another issue is the lack of interoperability between rival cloud services, creating friction for companies pursuing a multi-cloud approach. The practice of offering committed spend discounts to encourage customers to stick with a single vendor will also be examined.
Ofcom also identified possible issues with Microsoft’s software licensing practices. However, it did not make direct findings, leaving it to the CMA to decide whether to investigate further.
The CMA has not yet determined which specific elements of Ofcom’s findings it will focus on, and a separate report will be published in due course.
Industry experts have welcomed the investigation, calling for action to ensure flexible contracts and fair pricing. They argue that egress fees need to be controlled, with some even suggesting their abolition.
Both Microsoft and AWS have stated their intent to cooperate with the CMA throughout the investigation. Microsoft is already dealing with the CMA over its blocked acquisition of Activision due to competition concerns.
AWS disagrees with Ofcom’s findings, asserting that customers have the freedom to choose from various IT options, including on-premises solutions and managed services. They believe any intervention could unintentionally harm competition and IT customers.
The CMA aims to finalize its investigation by April 2025 and will announce the specific areas it plans to focus on well before that time.
