Fears about Amazon and Microsoft cloud computing dominance trigger probe
Oct 5, 2023, 5:37 AM | Updated: 7:56 am
Concerns from regulators about the dominance of Amazon and Microsoft in Britain’s cloud computing market have triggered an investigation into the competitiveness of the key industry.
The U.K. communications regulator Ofcom said Thursday that its yearlong study of the cloud communications services market found features that could limit competition. British businesses face barriers when they try to switch or use multiple cloud suppliers, it said.
Cloud computing uses data centers around the world to store photos and emails or run software. It has become a vital service for many businesses, which turn to cloud providers to avoid the cost of buying expensive equipment and real estate to run their own data centers.
Ofcom asked the U.K. antitrust watchdog, the Competition and Markets Authority, to take a closer look at the 7.5 billion-pound ($9 billion) cloud market. The watchdog said it was opening an in-depth investigation that’s expected to wrap up by April 2025.
“Some U.K. businesses have told us they’re concerned about it being too difficult to switch or mix and match cloud provider, and it’s not clear that competition is working well,” Ofcom’s director responsible for the market study, Fergal Farragher, said in a press release. “So, we’re referring the market to the CMA for further scrutiny, to make sure business customers continue to benefit from cloud services.”
Ofcom said it was concerned about the position held by Amazon and Microsoft, which together account for 70% to 80% of the cloud market. Google trailed behind with 5% to 10% of the share, and smaller players make up the rest.
Amazon Web Services, the online retail giant’s cloud computing business, said it disagrees with Ofcom’s findings, which it said “are based on a fundamental misconception of how the IT sector functions, and the services and discounts on offer.”
“The cloud has made switching between providers easier than ever. Any unwarranted intervention could lead to unintended harm to IT customers and competition,” the company said in a statement.
Both companies said they would work constructively with the CMA.
“We are committed to ensuring the UK cloud industry remains innovative, highly competitive and an accelerator for growth across the economy,” Microsoft said in a statement.
Ofcom said it was concerned about fees, technical barriers and discounts that could discourage customers from changing or using more than one provider. The CMA said it would investigate whether competition is working well and what needs to be done if it isn’t.
