Britain’s media regulator, Ofcom, has taken a significant step by requesting that the country’s antitrust authority, the Competition and Markets Authority (CMA), investigate the dominance of U.S. tech giants Amazon and Microsoft in the UK cloud market. The move comes as concerns have grown about the impact of their market presence on competition and the ability of UK businesses to utilize multiple cloud suppliers effectively.
Ofcom’s decision was based on the identification of features that hinder UK businesses from accessing and utilizing a variety of cloud service providers. In 2022, Amazon Web Services (AWS) and Microsoft jointly held a substantial 70–80% share of the public cloud infrastructure services market in the UK. Google, the closest competitor, accounted for a significantly smaller share, with 5–10%.
This investigation into cloud computing is not unique to the UK. In March, the U.S. Federal Trade Commission initiated its own inquiry into the cloud market, citing similar concerns shared by the UK, France, Japan, the Netherlands, and South Korea.
The CMA will now conduct an independent investigation to determine whether Amazon and Microsoft’s dominance has an adverse effect on competition. If such an effect is identified, the CMA will assess whether action should be taken or recommendations made to address the issue.
Amazon responded by disagreeing with Ofcom’s findings, stating that they were based on a “fundamental misconception of how the IT sector functions and the services and discounts on offer.” However, Amazon expressed its commitment to working constructively with the CMA.
Microsoft expressed its commitment to ensuring a highly competitive and innovative cloud industry in the UK and pledged to cooperate with the CMA’s investigation.
Dan Ridsdale, TMT director at research firm Edison, pointed out that the dominance of AWS, Microsoft, and, to a lesser extent, Google is a trend seen across major economies globally, with China being an exception. However, Britain is taking a proactive approach to addressing this issue and appears poised to potentially take regulatory action. Ridsdale suggested that other jurisdictions are likely to follow suit, making some form of regulatory action almost inevitable.
In June, the French antitrust authority raised concerns about practices in the cloud sector that could potentially hinder competition. The EU regulator is also scrutinizing Microsoft’s cloud practices following a complaint by the trade group Cloud Infrastructure Services Providers in Europe (CISPE), which includes Amazon among its members.
The CMA’s recent clash with Microsoft occurred earlier this year, when the regulator initially blocked the company’s $69 billion acquisition of games company Activision Blizzard. While a restructured deal was eventually approved, it underscored the CMA’s willingness to take on major tech companies.
In April, Ofcom expressed concerns about AWS and Microsoft’s practices due to their dominant positions in the cloud market and indicated its intention to request a competition regulator investigation. Reuters reported earlier this week that Ofcom was expected to pursue an antitrust investigation.
Ofcom’s decision to refer the cloud market to the CMA was welcomed by the latter, highlighting the importance of effective competition in the UK’s £7.5 billion ($9.1 billion) cloud market.
Google’s Vice President, Amit Zavery, noted that Ofcom’s referral highlights the need for an open cloud market without vendor lock-in. He emphasized the desire of UK government agencies, businesses, and consumers to have the freedom to move easily across cloud platforms and choose the services that best suit their needs. Google affirmed its commitment to allowing its products to operate on any cloud platform without penalties. The CMA is expected to complete its investigation by April 2025.
