Topline
The U.K.’s Competition and Markets Authority Thursday launched an investigation into the cloud computing market after media regulator Ofcom flagged concerns about the industry’s two dominant players Microsoft and Amazon.
Amazon Web Services and Microsoft's Azure control between 70-80% of the U.K.'s cloud services ... [+]
Key Facts
Ofcom’s request to the CMA to open an investigation comes after it completed a market study that uncovered “features that could limit competition.”
The British media regulator said its study found features that make it difficult for businesses to switch or use multiple cloud providers, adding that it was “particularly concerned about the position of the market leaders Amazon and Microsoft.”
Ofcom’s study pointed to the issue of egress fees, the steep fees a cloud provider charges a company to transfer data out of their cloud servers, which in turn dissuades them from changing cloud providers.
The regulator also expressed worry about the dominant players placing barriers to “interoperability and portability” which prevents customers from using multiple cloud services and complicates the process of moving to other providers.
The study also found that large players structured their discounts in a manner that required commitments for a certain level of spending, further dissuading the customer from using multiple providers.
The CMA said its investigation will look to establish if there are competition concerns and will intervene accordingly if needed.
Big Number
70-80%. That is Amazon Web Services and Microsoft Azure’s combined market share in the $9.1 billion (£7.5 billion) U.K. cloud services market, the Ofcom study found. Google Cloud is placed third with a 5-10% market share.
Crucial Quote
CMA CEO Sarah Cardell welcomed Ofcom’s referral saying the cloud market: “underpins a whole host of online services – from social media to AI foundation models…making effective competition in this market essential.” She added: “The CMA’s independent inquiry group will now carry out an investigation to determine whether competition in this market is working well and if not, what action should be taken to address any issues it finds.”
Chief Critic
In an emailed statement an Amazon Web Services spokesperson said: “We disagree with Ofcom’s findings and believe they are based on a fundamental misconception of how the IT sector functions, and the services and discounts on offer...Any unwarranted intervention could lead to unintended harm to IT customers and competition. AWS will work constructively with the CMA.”
Further Reading
Feds File Landmark Suit Against Amazon For Protecting Online Retail Monopoly (Forbes)
Microsoft’s $69 Billion Activision Deal Nears Approval As U.K. Looks Poised To Clear Gaming Takeover (Forbes)
