Fears about Amazon and Microsoft cloud computing dominance trigger UK probe

Worries regarding the dominance of Amazon and Microsoft in the United Kingdom’s cloud computing sector have prompted an inquiry into the competitiveness of this critical industry.

On Thursday, the UK communications regulator, Ofcom, revealed the outcomes of its yearlong examination of the market for cloud communications services, indicating potential factors that could constrain competition. The report highlighted that British businesses encounter impediments when attempting to switch between or utilize multiple cloud service providers.

Cloud computing, a service that relies on global data centers for storing photos, emails, and running software, has grown indispensable for numerous enterprises seeking to circumvent the expenses associated with procuring costly infrastructure and real estate for their data centers.

Consequently, Ofcom has enlisted the assistance of the UK’s antitrust authority, the Competition and Markets Authority (CMA), to conduct an extensive review of the £7.5 billion ($9 billion) cloud market. This investigation is expected to conclude by April 2025.

Ofcom’s director responsible for the market study, Fergal Farragher, noted in a press release, “Some UK businesses have voiced concerns about the difficulty of transitioning between cloud providers or combining services from multiple providers, raising questions about the effectiveness of competition.” He further stated, “Therefore, we are referring the market to the CMA for closer examination to ensure that business customers continue to derive benefits from cloud services.”

Ofcom has expressed particular apprehension about the commanding position held by Amazon and Microsoft, who jointly account for 70% to 80% of the cloud market share. Google lags behind with a 5% to 10% market share, while smaller players constitute the remainder.

Amazon Web Services, the cloud computing arm of the online retail giant, contested Ofcom’s conclusions, asserting that they are rooted in a fundamental misunderstanding of the functioning of the IT sector and the services and discounts available. The company declared, “The cloud has made switching between providers easier than ever. Any unwarranted intervention could lead to unintended harm to IT customers and competition.”

Both Amazon and Microsoft have pledged to cooperate constructively with the CMA. Microsoft issued a statement affirming their commitment to fostering an innovative, highly competitive UK cloud industry that acts as an engine for economic growth.

Ofcom has cited concerns over fees, technical barriers, and incentives that might dissuade customers from changing providers or utilizing multiple ones. The CMA’s inquiry will focus on assessing the effectiveness of competition in the market and determining appropriate actions if it is found to be lacking.

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More about Cloud Computing Market Competition

• Ofcom
• Competition and Markets Authority (CMA)
• Amazon Web Services
• Microsoft Cloud
• Google Cloud
• Cloud Computing
• UK Cloud Computing Market
• Competition Concerns in Cloud Computing
• Impact of Cloud Dominance on Businesses