The UK’s Competition and Markets Authority (CMA) has initiated an investigation into the provision of cloud infrastructure services in the United Kingdom, with a primary focus on industry giants Amazon and Microsoft. This move comes in response to a request from the British telecommunications regulator, Ofcom, following its own investigation that revealed indications of anti-competitive behaviour by these companies.
Ofcom’s report highlights concerns that these tech giants make it challenging for customers to switch between cloud service providers or utilize multiple providers simultaneously. Examples include customers incurring fees for data extraction from the cloud or receiving discounts when exclusively using one provider. Moreover, some cloud vendors are accused of introducing technical obstacles to hinder transitions between providers.
The CMA’s statement also references concerns raised by Ofcom regarding software licensing practices, particularly those associated with Microsoft. Notably, a year ago, an antitrust complaint was filed against Microsoft in the European Union by the cloud industry organization CISPE. This complaint centred on Microsoft’s alleged leveraging of its dominance in productivity software to steer European customers toward its Azure cloud infrastructure, potentially harming European cloud providers and IT services users.
While the CMA doesn’t explicitly mention Amazon in its statement, the Ofcom report spotlights this company as well. Ofcom, which requested the CMA’s intervention, asserts that Amazon and Microsoft jointly hold a substantial 70 to 80 percent share of the UK’s cloud market. Ofcom is particularly concerned about the operations of Amazon Web Services and Microsoft due to their dominant market positions. Notably, Google Cloud is the primary competitor to these two companies in the UK, holding a market share ranging from 5 to 10 percent.
The CMA’s investigation is expected to extend for up to 18 months, with a tentative deadline of April 4, 2024. During this period, the CMA will explore various theories regarding potential harm and propose solutions to address these issues. If substantial problems are identified, the CMA may also implement mandatory measures, which could include divestiture of specific business segments. In response to these developments, both Microsoft and Amazon have conveyed their commitment to working collaboratively with the CMA in a constructive manner, as reported by Reuters.
